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Robert Freedman, Senior Editor
Given how big a pill our country's being asked to swallow, it's not surprising that the vote in the House yesterday on the massive federal economic stabilization package was so close (205 to 228). The buzz on Capitol Hill and among policy analysts now is that the House could vote on a modified version of the package as soon as Thursday.
Although details on what the modifications will look like are still being discussed, you can get a lot of information on the basics of the package at REALTOR.org/CreditCrisis. NAR has put together a summary of the proposal (PDF) that includes its reasoning on why the stabilization effort is so important for real estate.
If you're getting bombarded with questions from clients, friends, and family about how a rescue bill would affect the market, the summary's a great way to get informed fast.
Also at REALTOR.org/CreditCrisis, you can access Treasury Secretary Henry Paulson's explanation of why the package is needed and President Bush's statement urging passage. NAR's letter to Congress on how the assistance could help get real estate markets moving again is available, too. The site will be continually updated with new information.
It's a big proposal with a lot of moving pieces. But a time like this—when people in the community are looking to you for insights—it pays to educate yourself on what's going on. So take a few minutes to look at the material NAR has compiled and share the information freely with anyone who has questions.
For real estate professionals, this is a challenging time. For consumers, it's a very uncertain time. As an informed real estate professional, you can help consumers and your colleagues sort through the confusion and get a better understanding of what the government's efforts mean.
Stacey Moncrieff, Editor-in-Chief
How refreshing! A good news story about the housing industry . . .
These days, frankly, it can be hard to put yourself in a happy place. But a colleague forwarded me a recent Lew Sichelman column on ways Realtors® and other housing industry professionals are giving back to their communities—despite the hard times.
His syndicated column appeared in the Chicago Tribune Sept. 14 under the headline “When Realtors® Become Agents of Social Change”.
Naturally, I was glad to see him recognizing the 10 amazing finalists for REALTOR® Magazine’s Good Neighbor Awards. But he also talked with a practitioner who is giving up commission income to help military families afford a home. And the full version of his story (not posted at the Tribune site) cited housing industry professionals who are donating their services for Habitat for Humanity builds.
Of course, this kind of good work goes on all the time under the media radar, but it’s great to see someone of Lew Sichelman’s stature giving it some play. Thanks, Lew, for putting me in a happy place today!
Two members of our staff have been nominated by the Active Rain real estate blog community as being among the top 100 most influential women in real estate for 2008. I am proud to count Stacey Moncrieff, REALTOR Magazine's editor-in-chief, and Pamela Geurds Kabati, our vice president and editorial director, as my colleagues. I agree that they are two of the most influential women in real estate, and I encourage all of you to vote for them. I'm also psyched that other NAR staff stars are on the list: Janet Branton, Senior Vice President, AE/Leadership, International & Specialties, and Laurie Janik, General Counsel.
Voting closes Friday, September 26.
Vote for Stacey and Pamela here and choose three other picks too. Any other suggestions?
Robert Freedman, Senior Editor
The subprime meltdown precipitated the credit crisis that the Bush administration and Congress are now trying to fix with the proposed $700 billion Wall Street bailout, but shifts in global capital flows would have wreaked havoc in the U.S. mortgage market even if subprime lending hadn't gotten out of hand, former Treasury Secretary Lawrence Summers told a housing and mortgage credit forum in Washington on Tuesday.
"Trillions of dollars in surplus capital abroad" were seeking a place to go, he said, and U.S. mortgage-backed securities were one of the top destinations for that money.
As a result, he said, "bubbles" would have formed in the housing market even without the attraction of high-yield securities backed by subprime mortgages. "It's not accurate to say subprime caused this," he said at the forum, hosted by the Brookings Institution.
The problem now, though, is to figure out how to get these mortgage-backed securities--whose values have fallen way below what they were originally priced at--off the balance sheets of financial institutions so they can get recapitalized and start making loans again, said Summers and other speakers at the forum, including Federal Deposit Insurance Corporation Chair Sheila Bair.
Summers and Bair agreed the bailout package must be big and quick but Summers warned
against efforts to impose too many restrictions on the bailout structure.
"The risk isn't in giving Treasury too much authority but in giving it too little," he said. His remarks seemed to take aim at the concern raised by lawmakers and others that the bailout--proposed by U.S. Treasury Secretary Henry Paulson--is too vague in setting out how much power the federal government would have in buying up the securities.
Bair said that the federal government needs flexibility in the bailout, and that getting the illiquid securities off institutions' balance sheets is the priority in order to stabilize the availability of credit. But the legislation should nevertheless make troubled home owners part of the equation too by including standards through which financial services companies can restructure the mortgage loans of individual borrowers.
"The proposal doesn't have a loan restructuring plan," she said.
Panelists had a lot of questions about the process Treasury would use to set the value for and then buy the securities, a task made complicated by the level of uncertainty in the market over what they're worth.
If the agency tries to maximize taxpayer value by valuing the securities as low as possible, financial institutions are unlikely to participate and the credit crunch will persist. If the values are set too high, taxpayer money could be put at risk if down the road the securities never command the value that Treasury paid for them.
When all is said and done, and the immediate credit crisis is addressed, the federal government will need to take a hard look at the entire "shadow banking" industry that caused the crisis in the first place.
This industry--hedge funds and other Wall Street conduit lenders that package and channel the mortgage-backed securities to global investors--has been largely unregulated and until this point that's been their big attraction. With none of the oversight that banks are under, they've been able to create and market the highly complex securities that have been such a big draw to investors.
Should the government clamp down and impose on them banking-type regulations, their flexibility to innovate will be constrained, potentially spelling an end to the strong capital flows that the mortgage industry has enjoyed in the last decade.
Summers says it would be a mistake for the federal government to try to set standards that would reduce the likelihood of individual Wall Street companies from failing. That would only end up creating a environment in which innovation is curtailed.
The better approach is to create a system in which companies can fail without bringing the larger system down with them. Right now, as the Lehman Brothers failure showed, no such system is in place today, so when a big player falls, the entire system is at risk and massive federal intervention is needed.
Stacey Moncrieff, Editor-in-Chief
If I want to attend a conference to learn how to be a more effective “digital communicator” (translation: a magazine editor using the Web), I typically have to dish out more than $1,000 for two days of education sessions. Entertainment is extra. That’s why it’s not hype to say that, at $330, the four-day REALTORS® Conference & Expo (complete with a free Lionel Richie conference, keynote address by Lance Armstrong, and night at Universal Studios to name just a few of the features) is an incredible bargain.
All that said, I know many of you will not be traveling to Orlando in November for this year’s conference. That’s why we bring a sliver of the conference to you in the October issue of the magazine. We do that this year with exclusive speaker interviews and a complete list of conference exhibitors to-date.
But there’s more to the October issue than a preview of the REALTORS® Conference. NAR Chief Economist Lawrence Yun gives a lesson in commodity pricing and talks about how that might bode well for home prices.
If the slow market is getting you down, read our interview with psychologist and author Kathy Cramer, who teaches the importance of using “asset-based thinking” to detect opportunity in tough times.
This month, we also bring you the final segment of our 2008 Work Smart Series—with advice and scripts that’ll help you generate referral business from past customers.
And don’t miss this month’s buyer’s guide on how to find the right printer for your business.
Finally, if you’re a political junkie and missed our coverage of the Democratic and Republican national conventions, see the highlights now. Learn how and why 300 of your fellow REALTORS® served as delegates at the conventions and helped spread the “REALTOR® Party” message.
Robert Freedman, Senior Editor
Effective Sunday, U.S. taxpayers are owners of more than 75 percent of Fannie Mae and Freddie Mac.
The Federal Housing Finance Agency, a U.S. regulatory body created as part of the Housing and Economic Recovery Act enacted just about six weeks ago, put the two secondary mortgage market giants into conservatorship on Sunday.
That legal action gives James Lockhart III, the head of the regulatory agency (created out of the old Office of Federal Housing Enterprise Oversight, or OFHEO), the same power as Fannie's and Freddie's directors, officers, and shareholders.
On top of that, the U.S. Treasury Department is buying the companies' senior preferred stock. That's where taxpayers' 75 percent-plus ownership of the companies comes from.
The Treasury is also taking other steps to shore up the companies, including a commitment to purchase their
mortgage-backed securities and create a process through which they can borrow money from the U.S.
Because of the grand scope of the government's takeover of Fannie and Freddie, the ultimate impact of the action can't be known at this early stage. But the short-term impact is expected to be clearly positive for real estate and REALTORS®.
As NAR Chief Economist Lawrence Yun says, mortgage interest rates should go down a bit, making homeownership more affordable.
Lockhart might even reverse Fannie's and Freddie's recent fee hikes, although that's just speculation at this point. In any case, as home sales pick up and the slack in housing inventory tightens, home prices could stabilize, fueling a virtuous cycle that could help get home sales back on solid footing.
Another piece of positive news is that REALTORS®—through NAR—can have some input into what the secondary mortgage market companies will look like in the future. That's because NAR, along with other industry groups, will be providing guidance as to how the companies should be restructured.
You can learn more about the big news with Fannie and Freddie, and what the impact of the government's actions could be, at a new page on REALTOR.org.
Melissa Dittmann Tracey, Associate Multimedia Editor
 ST. PAUL, Minn. – Arizona Sen. John McCain vowed to stand up and fight for the country to keep it safe from global threats and help rebound from a sagging economy, as he accepted the Republican party’s nomination for president of the United States here tonight.
“These are tough times for many of you,” McCain told the crowd at the Xcel Center. “You’re worried about keeping your job or finding a new one, and are struggling to put food on the table and stay in your home. All you ever asked of government is to stand on your side, not in your way. And that’s just what I intend to do -- stand on your side and fight for your future.”
McCain's speech wrapped up the four-day Republican National Convention (Watch a video recap of real estate's presence during the RNC.)
During his speech, McCain said he found the right partner in his vice presidential nominee, Sarah Palin, to help him shake up Washington, which drew cheers from the crowd, who had been won over by Palin after her energetic speech last night.
“I fight for Americans,” McCain said. “I fight for you. I fight for Bill and Sue Nebe from Farmington Hills, Michigan, who lost their real estate investments in the bad housing market.
Bill got a temporary job after he was out of work for seven months. Sue works three jobs to help pay the bills.”
McCain vowed to keep taxes low, find new energy sources, cut wasteful government spending, and, he said, he’d go across party lines to find solutions to achieving his goals. Read a full transcript of McCain’s speech.
“Keeping taxes low helps small businesses grow and create new jobs,” McCain said.
With both the Republican and Democratic conventions now concluded, the race is on between McCain and Democratic pick Barack Obama for the White House. Which candidate do you think will do the most to help real estate?
Watch video highlights of real estate’s presence at the Democratic and Republican National Conventions from REALTOR® Magazine.
More than 200 Republican and about 100 Democratic delegates at the 2008 Republican and Democratic National Conventions are also REALTORS®. Why did they decide to take on this role in our country's election process and how has it helped them in their real estate business? We caught up with several REALTOR® delegates during the Republican and Democratic National Conventions. Watch the video and hear how their political involvement has helped them.
ST. PAUL, Minn. -- Watch video footage from REALTOR Randy McKinney, a Republican delegate from Alabama, as his state casts its delegate votes for the presidential nomination of Sen. John McCain.
Robert Freedman, Senior Editor
 ST. PAUL, Minn. -- As the political excitement at the Republican National Convention entered its third day, much of the attention among politicos and the media was on the upcoming speech of vice presidential nominee Gov. Sarah Palin of Alaska. But about a mile from the Xcel Energy Center, where the festivities are taking place, NAR President-elect Charles McMillan paid a visit to Ravoux House, a high-rise public housing project with several hundred elderly and disabled residents that’s everything critics and supporters say public housing should be: safe, decent, and affordable.
“There are still people who cannot afford the American Dream and in the current environment that’s becoming even more difficult,” said McMillan, who went on to praise the work of the St. Paul, Minn., Housing Authority for its success with its Ravoux community. “But we must do more to help not only those struggling to get on the bottom rung of the housing ladder, whether that’s ownership or shelter through rental programs, and we must do more to preserve homeownership for those who are threatened with losing their homes.” (Watch a video of McMillian's remarks.)
 Inside the Xcel Center, amidst all the political speeches, some 2,000 delegates and tens of thousands of other convention-goers heard that same call for homeownership preservation.
“Today, Americans are concerned about keeping their jobs, about keeping their homes,” said Carly Fiorina, former chairperson and CEO of global technology giant Hewlett-Packard, who spoke on the convention floor that evening.
The core of any plan to stem the mortgage crisis and ramp up economic growth must start
with the country’s entrepreneurial spirit, she said, in which “innovation and entrepreneurship” are rewarded, and “individuals and companies are empowered” to create wealth and opportunity.
Meg Whitman, former president and CEO of dot-com giant eBay, said government can do the most to help by ensuring households and businesses have plenty of room to grow their income, and she lauded her party’s plans to double the size of the child tax exemption, reduce business taxes, offer tax incentives to buy health insurance, and simplify the tax code.
“Mortgages once thought to be safe are now threatened,” she said. “It would be foolish to deny what we all know to be true. Our economy is struggling and Americans are hurting. We live in a time of economic anxiety and hardships.”
Even so, the country knows how to pull together during tough economic times, she went on. “America is all about the inspired individual—men and women who are free to pursue dreams and ambitions in a society that encourages creativity, industry, advancement, and risk taking.”
McMillan said REALTORS® have been taking their message of finding solutions to today’s two big housing challenges—homeownership preservation and affordable housing—to both parties at their national conventions. And the fact that both parties understand the importance of housing to the country’s strength is a heartening sign that REALTORS® will be heard.
“REALTORS® stand ready to work with all of our partners,” he said. “We carry that message to both the Republicans and the Democrats and regardless of who’s in the White House or who’s in the Congress.”
Watch video highlights of NAR President-elect Charles McMillan, and REALTOR® and Nevada Republican delegate Jack Woodcock talk about the real estate and politics at 2008 Republican National Convention in St. Paul, Minn.
Robert Freedman, Senior Editor
ST. PAUL, Minn. — When Bill Gross was at the podium in the Xcel Energy Center Tuesday evening, the second day of the Republican National Convention here, he moved many of the delegates and other convention-goers with his stories of the farmers helped by Farm Rescue, a nonprofit group he founded. The group doesn’t step in with money; rather, it deploys volunteers — often other farmers — to help plant, maintain, and harvest crops for farmers who’ve suffered a disabling injury and need time to recuperate before they can get back to their fields.
As Gross put it, “We give them an opportunity to continue their livelihood during an unexpected crisis.”
Shortly after Gross made his remarks, the convention heard from Ashley Gunn, a junior at the University of Pennsylvania who launched a nonprofit that turns abandoned houses into affordable homeownership opportunities for indigent households.
What struck me as I was listening to these stories is how much they resemble the kind of work REALTORS® do every day in their communities and that are showcased each year in the REALTOR® magazine Good Neighbor Awards. As a frequent judge for these awards, I know that the winners and runners-up represent just a fraction of the hundreds of entries submitted each year. Without a doubt, for REALTORS®, every day is “service” day.
That’s a message NAR and the hundreds of REALTORS® serving as delegates to this and the Democratic convention last week have been sharing with lawmakers and others involved in the
political process at the convention forums and other events.
“REALTORS® are community people,” says NAR Chief Lobbyist Jerry Giovaniello. “They stay in their community, they know what their community is about, so it’s a natural inclination for them to get involved in their local charities.”
But REALTORS® are also well known for another type of “service leadership,” and that’s their involvement in the political process, at all levels of government. Indeed, that’s why such a high percentage of delegates to both parties’ conventions are REALTORS®, says
NAR President-elect Charles McMillan. (Watch video highlights.)
“Our strong presence is indicative of what we always say: we care about what happens in our communities,” he told me at a housing industry event Tuesday hosted by NAR, the National Association of Home Builders, and the Independent Community Bankers of America.
More than 200 delegates to the Republican convention are REALTORS®, and more than 90 were delegates to last week’s Democratic convention.
“All politics is local,” McMillan says. “That’s why we encourage REALTORS® to work with their party, whether Democratic or Republican, to talk to lawmakers on a one-to-one basis about our agenda.”
Among the top issues on the REALTOR® agenda for the next administration and Congress is affordable housing, including affordable for-sale housing for teachers, firefighters, law enforcement officers, nurses, and other service professionals who increasingly are priced out of the communities in which they serve.
“We need multiple tiers of housing,” he says.
So, the charitable work and the political work that REALTORS® are well-known for among lawmakers are two sides of the same coin. Both efforts aim toward the goal of building communities.
By getting involved politically, through donations to local, state, and federal candidates and by getting involved in their campaigns, lawmakers come to “look to us almost as advisers,” says Jack Woodcock, CCIM, CRS, founder-broker of Prudential Americana Group, REALTORS®, in Las Vegas, and an alternate for the Nevada Republican delegation at the convention.
That gives REALTORS® the chance to make lawmakers understand not just the economic importance of real estate and unfettered private property rights, but thoughtful approaches to helping working families find affordable housing in their communities.
“Our involvement gives us enormous opportunity to make sure our elected officials understand the concerns of our industry,” he says.
Charitable activities and political involvement: it’s a powerful one-two combination that’s turning out to be a star at both the Republican and Democratic conventions this year.
Robert Freedman, Senior Editor
ST. PAUL, Minn. -- The scene of protestors on Kellogg St. outside the Xcel Energy Center in St. Paul was chaotic but for the hundreds of REALTORS® here attending as delegates to the Republican National Convention the focus was on the Gulf Coast.
As they did when the Gulf Coast was struck by Hurricane Katrina in 2005, REALTORS® stepped up with donations to the REALTOR® Relief Fund. But in this case, they were opening their wallets even before it was clear what the full impact of Hurricane Gustav would be.
“It was extremely moving to see how quickly REALTORS® came forward in this time of need,” said NAR President-elect Charles McMillan.
While Gustav was making landfall, NAR and another group, the Creative Coalition, were hosting a joint forum to hear from U.S. Department of Housing and Urban Development staff on the recently passed housing bill at a restaurant across the river in Minneapolis. The Creative Coalition is the social advocacy arm of the entertainment industry, and the group, along with NAR, also hosted a joint meeting at the Democratic National Convention in Denver the previous week.
Official activities at the convention were curtailed because of Gustav, with First Lady Laura Bush and Cindy McCain, wife of presumptive Republican presidential nominee Sen. John McCain of Arizona -- the only two keynoters on Monday. However, convention-goers stayed busy with a phalanx of meetings and forums outside the convention hall.
More than 200 REALTORS®, representing 44 states, were in town as delegates to the convention. They’ll be joining more than 2,000 other delegates this week to vote on the nomination of Gov. Sarah Palin of Alaska for vice president and John McCain for president.
For the REALTOR® community, they’ll be communicating the importance of REALTOR® issues
to the delegates, other convention goers, and the local, state, and federal lawmakers in town, along with their policy staffs.
“The Republican platform is not complete without a prominent place for homeownership and affordable housing,” said McMillan. “That’s why we’re here. We carried the same message to the Democratic National Committee convention last week. Ours isn’t a partisan message; it’s a message about the importance of real estate to our country’s economic strength.”
For Gregory Bauman, CRS, of Realty Executives in St. Paul and the president of the St. Paul Association of REALTORS®, the large number of REALTORS® in his city gives him a chance to play host to his colleagues and showcase the grand houses along Selby St., near the colossal St. Paul’s cathedral, and all the other popular parts of his city. “This is such a beautiful area,” he said. “And the people are friendly—Minnesota nice.”
Whether Gustav continues to rain on the convention’s parade or not, “Minnesota nice” is an apt term for the generosity of REALTORS® and others here who are standing ready to help the Gulf Coast in its time of need.
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