As far as Greg Rand is concerned, the Housing and Economic Recovery Act of 2008 is a godsend for banks, borrowers and his industry ”“ and a positive  example of politicians”™ ability to pull it together for the sake of the country”™s well-being.
“I”™m impressed that Republicans and Democrats put partisanship aside for this crucial legislation,” said Rand, managing partner at Prudential Rand Realty, one of the Hudson Valley”™s largest real estate companies with 21 offices in Westchester, Rockland, Orange and Sullivan counties. Â
President Bush signed HR3221 into law in August.
Along with several provisions for bolstering the ailing real estate market, the legislation includes “$300 billion dollars of FHA money for people in trouble with their mortgages and the takeover of Freddie Mac and Fannie Mae are part of the law. It is going to have a positive effect on all segments of the industry: buyers, brokers and banks,” said Rand.
Rand said the move on the part of the federal government to take stewardship of Fannie Mae and Freddie Mac is a positive step he believes will help to stanch the flow of foreclosures, aid homeowners behind on mortgage payments and provide an alternative to those caught in the trap of having paid more for a house than it is now worth.
Four pillars essential in keeping a real estate deal on firm footing consist of “a good job, a down payment, a good credit score and good collateral.” said Rand. “In the late 1990s, reliance on credit scoring became so prevalent that it made giving loans too easy. It was a major contributor to how the market was driven from 2000 through 2005. Â Good credit score? Boom, you had a loan. Â
“Quick-and-easy loans didn”™t ask people to prove their worth, but relied on how good the score was. It may have qualified more people, but it got out of control and eventually took control, letting mortgages flow incredibly fast and simply ”“ too fast and too simply ”“ and now we are left to deal with the result.”
Banks and lenders who stuck by their traditional underwriting rules remained relatively unscathed by the mortgage meltdown, “and the brokers and banks who lent money based on credit scores are gone or in ruins, their Wall Street ”˜bundles”™  now worthless,” said Rand. “We”™re back to the good old days, following traditional standards of lending. Now that the FHA has taken control of Fannie and Freddie and made this $300 billion available, it is going to help thousands of homeowners stave off foreclosure.”
Rand feels there are no “victims” in the financial crisis facing the U.S. “Some people were licking their chops to max this situation out, showing people homes they couldn”™t really afford and guiding them into financing that was too quick and easy and ultimately unaffordable.
“At the other end were people knowing they were getting in over their heads but counting on prices to continue climbing or believing they”™d be able to easily refinance. I”™m glad that my company stayed away from those kinds of lending programs, but we are as affected by the slowdown in the market as everyone else.”
According to Rand, Prudential”™s 2008Â sales are down by 27 percent compared with 2007. He expects the market to find a comfort level by 2010.
People facing foreclosure “bury themselves because they are ashamed” said Rand. Getting them to face up to reality, come apply for FHA mortgages and  try to refinance to a payment they can afford “is going to take a little hand holding. The goal is to get people to come in and see if they can qualify for the refinancing. If they”™ve missed eight of their last 10 mortgage payments, they won”™t be turned away. The FHA will look at prior history and see how credit was prior to this debacle hitting.” forward and
To that end, Rand”™s company is in the process of creating FHA seminars to help those facing foreclosure. “Let”™s face it ”“ the house down the street with the grass waist-high is not good for any neighborhood. The people who bought homes don”™t want to lose it, leave their neighborhoods, move their families or take their children out of school. Kudos to the FHA for stepping in and trying to turn the housing market around. That $300 billion can save a million or more homes from foreclosure and get them back on track.”
Rand has high hopes for the future of the Hudson Valley. “Real estate is cyclical,” he said. “Most people buy a home to live in it. For those who saw their houses double in price over the past 10 years, they will see the correction, and eventually prices will slowly start rising again. There”™s a lot of inventory out there for buyers, and right now, it”™s their market.”Â
Said Rand: “The ”˜high credit score-no questions asked”™ mortgages are history; and hopefully, we”™ve all learned something.”
