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How easy would it be to launch the initiative to help underwater home owners that President Barack Obama talked about in his state of the union speech on January 24?

Policy experts speaking with politically active REALTORS® in Washington this week said it would be relatively easy to create the program if an agency like FHA or even if the two secondary mortgage market companies Fannie Mae and Freddie Mac were given responsibility to do it. As policy consultant and former HUD official Brian Chappelle put it, the program could be implemented “almost overnight” because FHA already has its lenders and refi procedures in place.

But Chappelle and others said if FHA or the GSEs undertook the program, it would be best for the government to create a separate insurance fund to cover the new refinanced mortgages. That way, the entities’ main insurance funds wouldn’t be at risk should a portion of the loans go bad.

Brian Gardner, a Wall Street analyst, said the program would require close coordination with the Federal Reserve, otherwise investors in mortgage backed securities would demand a risk premium in interest rates to account for future political uncertainty of the program.

Patrick Swire, a former Obama administration domestic policy advisor and now an analyst with the Center for American Progress, said Obama’s refi initiative is a logical extension of the administration’s previous efforts to help underwater home owners since the economic crisis hit several years ago. The Home Affordable Refinance Program (HARP) was a first attempt to give lenders, investors, and troubled borrowers an incentive to modify their mortgage before the house is lost to foreclosure. This new program would provide an opportunity to implement lessons learned from that earlier effort.

Would lenders even want to participate? Ann Schnare, a policy consultant who formerly was an executive with Freddie Mac, said lenders are worried about getting hit with loan repurchase penalties, which previously happened infrequently but since the mortgage market upheaval have become far more common. So, unless that issue is addressed, lenders would likely be worried about the risks of participating.

Of course, whether the program will even pass Congress is another matter altogether, and that remains the big question. But the panelists appeared to agree that implementation was clear-cut should it pass.

Under the refi initiative President Obama discussed in his speech, underwater home owners who are struggling to stay current on their mortgage would be able to refinance to take advantage of today’s historically low rates.

The video excerpt above shows the discussion, Wednesday, Jan. 26, among the panelists. At about eight minutes, the video is relatively long, but the discussion is substantive and interesting, so it’s worth the investment in time to watch if you’re interested in these policy issues. Session moderator is Alan Zibel of the Wall Street Journal/ Dow Jones News Wire.

Background on the Obama refi proposal.

By Brian Summerfield, Online Editor, REALTOR® Magazine

A subject we’ve talked about a great deal here on the Speaking of Real Estate blog got some play during the Republican presidential debate last night in Jacksonville. (Transcripts are available here.) A question was asked of the four candidates about how to phase out government-sponsored enterprises Fannie Mae and Freddie Mac.

However, none of them gave satisfactory answers. Former Massachusetts Gov. Mitt Romney started out by claiming that “we’ve had this discussion before,” then attacked fellow candidate and former Speaker of the House Newt Gingrich for his business ties to Freddie Mac. Romney concluded by saying creating jobs was crucial for improving the housing market — which I believe is true, but that doesn’t answer the question.

In his response, Gingrich defended his involvement with Freddie and charged that Romney had made a fortune off of his investments in the GSEs. The two candidates went on for a couple more minutes trading barbs about who, exactly, had benefitted more from their Fannie and Freddie affiliations.

Rick Santorum, a former Senator from Pennsylvania, said he “stood tall” against the GSEs back in 2006 when he wrote a letter with other senators asking for Fannie and Freddie reform that involved gradually reducing the number of mortgages underwritten by the two. He then criticized both Romney and Gingrich for criticizing each other instead of focusing on the question.

Former Texas Congressman Ron Paul came closest to answering the question when he said the two organizations “should have been auctioned off right after the crash came.” And he offered an explanation of what led to the bubble in the first place: excessive credit and artificially low interest rates, among other things.

As with Romney’s answer, Paul’s response wasn’t necessarily factually wrong, but the question wasn’t really about how the bubble came into existence and what should have been done in 2008. It was about how to phase out the GSEs now. Presumably, Paul is in favor of liquidating them, but what would that look like?

For its part, NAR has argued that the two entities should be replaced with a nonprofit, government-charted organization that continues to back standardized loans, just as Fannie and Freddie do now, but without the profit motive. The goal for NAR is to ensure  a government-based entity that stays in the market at all times rather than rely on private companies only, since when markets slow, they are prone to leave. Also, whatever structure the new entity takes, it shouldn’t crowd out private competitors — NAR wants private companies to return to the market. (Go here for more information on NAR’s position.)

Now I know the format of televised debates doesn’t lend itself to long, detailed answers about policy. But in the wake of the State of the Union address earlier this week — in which Obama discussed housing problems and solutions at length — and with Congress preparing to tackle new approaches to Fannie and Freddie, these kinds of answers just aren’t going to cut it. If the GOP presidential field wants to be taken seriously on housing, they need to offer something more substantial than they did last night.

(Editor’s Note: REALTOR® Magazine does not make endorsements in political races, and this analysis should not be viewed as favoring any party or candidate over another.)

By Todd Carpenter, Director of Digital Engagement, National Association of REALTORS®

I wrote my first blog post about the real estate and mortgage industries on Jan. 27, 2005. Much has changed, but several truths about blogging have remained pretty constant:

1. Knowledge is learned, expertise is imparted.

Take all the training you want. Read every book. Learn from a lifetime of experience. Nobody will really care until you share that knowledge. Until I started my blog, I was just a good account executive for a lender. After I started it, I became an industry expert that other news organizations wanted to quote. People don’t want you to tell them you are an expert. They want you to prove it.

2. Have a business purpose behind every blog post you write.

I’ve written about this before. Beyond proving your own expertise to a reader, a great blog posts also serves additional business purposes. They could be designed to help you network with local businesses, or win in the search engines, or to build a library of FAQs you can reference later. Whatever it is, try to establish a business purpose for your posts before you write them.

3. Social networks come and go, but your Web site is forever.

There’s only one place on the Internet where you get to make all the rules. You get to decide when to ask for the sale. You get to decide if others can advertise next to your content. You get to decide who else gets to comment on your work. Where the platform’s very existence is assured. That’s your own Web site or blog. If you have put all your eggs in a basket where you don’t get to make the rules, what are you going to do when the rules get changed for you? A Web site or blog has to be the hub of all of your digital communications.

4. Great work doesn’t come free.

When it comes to hosting your blog or Web site, don’t trust them to a free site. You get what you pay for.

5. If you’re wrong, admit it quickly and emphatically.

This comes straight from Dale Carnegie. People make mistakes. Life goes on. If you’ve found yourself in a position where you want to take something back, just say you’re sorry and take it back. It’s really that easy.

6. Become genuinely interested in other people.

I often refer to a great set of posts by Jeff Turner on listening as a strategy. Again, this is a concept from Dale Carnegie, who once said, “You can make more friends in two months by becoming interested in other people than you can in two years by trying to get other people interested in you.” The more time you spend learning about people in your community, the more you’ll have to write about.

7. Be willing to take risks.

Management guru Peter Drucker once said, “People who don’t take risks generally make about two big mistakes a year. People who do take risks generally make about two big mistakes a year.” Seven years after my first blog post, there are still dynamics at play in this new social world that are a mystery to me. I know that I will make more mistakes. I can’t let that stop me, and neither can you. Just try your best and learn from them.

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