Skip to content

Special Series: RE/MAX’s Dave Liniger Makes a House Call(ing) Out

November 1, 2012

Special Series: RE/MAX’s Dave Liniger Makes a House Call(ing) Out

Recently, Dave Liniger, co-founder and chairman ofRE/MAX, LLC, had some choice words for the presidential candidates regarding their stances—or lack thereof—on the nation’s housing crisis.

In an open letter addressing both President Obama and Governor Romney, Liniger calls out the two candidates for avoiding the issue when it comes to the current state of affairs in American housing. Liniger points out that the two nominees are focusing all their energy and resources on the economy at large and chides them because “as leaders, you ignore housing at our peril,” he says.

Liniger writes, “Although the economy is recognized as the single most important issue in the campaign, and housing is commonly blamed for the recession and sluggish recovery, it is unimaginable that relevant solutions to housing issues have not been front and center.”

Liniger says housing has the ability to promote a stronger overall economic recovery “if it is allowed to do so.” He says “it will take real political leadership in the White House and Congress to acknowledge this fact.”

He goes on to point out that while there have been positive shifts in market movement recently, the housing industry is still far from being out of danger. Liniger backs up his statement by breaking down four basic, yet significant, obstacles he sees as blocking the road to recovery for housing, and ultimately the economy.

First, Liniger believes the Mortgage Forgiveness Debt Relief Act must be extended. Initially approved in 2007, this act is set to expire on December 31, barring any action to preserve it. Without an extension, Liniger projects a possible reduction in the nation’s home sales by an immediate 20 percent.

“The CB0 [Congressional Budget Office] says a two-year extension will save distressed families about $2 billion,” Liniger notes, adding that troubled homeowners who qualify for a loan modification or short sale are not likely to pursue either of these options if the act expires, making their remaining mortgage

balance taxable income.

Second, Liniger lobbies for reasonable lending standards to be established. In response to the crisis, lenders have enforced strict lending requirements in order to cover their own interests, but Liniger argues the pendulum has swung too far in the direction of conservatism, to the point that even those individuals with good credit face difficulty obtaining a loan. This schism only further halts the movement of real estate.

Financing appears to be getting more difficult to secure, not less, according to Liniger. “In August, the averageFICOscore of a rejected mortgage application at Fannie and Freddie was 734, two points higher than one year ago,” he writes.

Related to these financing difficulties is Liniger’s third point—housing-specific provisions of the Dodd-Frank Consumer Protection Act, more specifically, defining a “qualified mortgage” as directed by the act. Liniger says if regulators craft an unreasonable definition, it will become even harder to obtain a mortgage and potentially add to financing costs. “Even the authors of this legislation have said this was not their intent,” he writes.

Liniger describes the fourth obstacle as one that “really shocks most of us in real estate,” and that’s reducing or eliminating the mortgage interest deduction. Regarded by some as merely a loophole for the wealthy, Liniger urgently ushers in the opinion that “this is the wrong approach at the wrong time,” and “even a gradual elimination gives pause to many potential homeowners.”

While Liniger gives the readers of his letter much to think about and discuss, perhaps his most telling statement is a bold order that leaves little room for interpretation. Simply stated, he commands the candidates to “first, do no harm.” His message is clear and concise, calling for a “less is more” mentality in regards to correction and forced action.

Imploring the candidates to consider the repercussions of their policy choices, Liniger asks of whomever is elected, “Do not disrupt the ability of a fragile housing market to positively impact a stalled economic recovery at this critical time.” He goes on to assure Obama and Romney that “[h]ousing is a powerful economic engine that can easily add a large number of jobs and cash to the overall economy if not prevented from doing so.”

With such a bold declaration and appeal to both candidates, the debate surrounding the presidential nominees’ impact on housing is heating up quickly. Do you think Liniger’s mantra hits its mark? We want to hear what you have to say on the matter. Voice your opinion toeditor@dsnews.com.

 

From → Uncategorized

Leave a Comment

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: