Ron Paul and Real Estate

[mikelovesgod]

Dr. Paul's views intrigue me, but I sat down and thought about his stances and I realized his views would be in direct violation of my livelihood. I'm a real-estate investor and I work with realtors and loan officers. If there is no Dept of HUD than many of the programs I use to make money will be long-gone.

Suffice it to say people would be more secure and people would have to have a large down-payment to buy a house, but all of the aggressive loans will be gone: Fannie, Freddie, and FHA. Short term I think it will devastate people like myself, developers, and loan officers (as if things aren't bad enough right now).

Still, I want to be an American and in the best way of being an American which is to support true economic principles of strength for the long-term. I cannot see how Dr. Paul's economic platform can honestly help my business, but only hurt it. I know for a fact that's not his intention either. But can anyone see how loans could continue to be done in the older standard of using only the capital available? I don't think people really know about this.

The upside is that Wall Street will be stronger than ever, but real estate development and residential sales will be forced to slow down much further than anyone could think of. I'll await a good response to this, but I'm still for the good Doctor because I'm for what's best in this country, not what's best for me.

 

[nayjevin]

Short term I think it will devastate people like myself

I don't know the intricacies of your business, but I would say abolishing the I.R.S. is a short term devastation of I.R.S. employees too.

Ron Paul has made several statements to the effect that his top priorities would not be to eliminate government programs entirely that people are dependent on. The first step is to allow people to 'opt out' of having to fund those programs (by force) through taxation.

He would, I believe, certainly listen to those who say their lives will be negatively affected by removing a government program -- and he has expressed a willingness to do so in a way that let's those dependent on the program down easy.

P.S. I appreciate your non-selfish approach to this question -- many people decide it will be bad for them and abandon principle on the way.

 

[kimosabi]

Dr. Paul's views intrigue me, but I sat down and thought about his stances and I realized his views would be in direct violation of my livelihood. I'm a real-estate investor and I work with realtors and loan officers. If there is no Dept of HUD than many of the programs I use to make money will be long-gone.

Suffice it to say people would be more secure and people would have to have a large down-payment to buy a house, but all of the aggressive loans will be gone: Fannie, Freddie, and FHA. Short term I think it will devastate people like myself, developers, and loan officers (as if things aren't bad enough right now).

Still, I want to be an American and in the best way of being an American which is to support true economic principles of strength for the long-term. I cannot see how Dr. Paul's economic platform can honestly help my business, but only hurt it. I know for a fact that's not his intention either. But can anyone see how loans could continue to be done in the older standard of using only the capital available? I don't think people really know about this.

The upside is that Wall Street will be stronger than ever, but real estate development and residential sales will be forced to slow down much further than anyone could think of. I'll await a good response to this, but I'm still for the good Doctor because I'm for what's best in this country, not what's best for me.

mikelovesgod,

In the current system your livelyhood is in jeopardy anyway.

The current system has already started wiping out Real Estate in America with the sub-prime debacle and it is only going to get worse.

This crash in US property is deliberate and has been engineered by Wall Street and the Fed to wipe out the Poor and Middle classes of America.

Probably the best place to get a run down on the current state of Real Estate/Mortgage Lenders in trouble that I have found is here ==> http://ml-implode.com/ the count is currently up to 91 Mortgage Lenders that have gone bust since late last year,

The most obscene part of this obnoxious Ponzi Scheme is they are deliberately crashing the US economy so that out of the chaos, they can turn Canada, US and Mexico into the North American Union and then introduce the Amero as the saviour of the US dollar and wipe out the US constitution and your civil rights in one foul swoop.

The only way to fix the US economy is to Introduce a Sound Monetary policy and get rid of the US Fed, IRS, World Bank, International Monetary Fund, United Nations etc.

 

[wbbgjr]

I'm an investor. Honestly, all these bubbles and crashes are good for me to make money. However, what good is all this money if we continue to lose our freedoms and drive our country into bankruptcy.

 

[mikelovesgod]

The IRS is a part of the gov't. Real-estate related businesses aren't so the comparison fails but I know what you mean in principle. I wouldn't be out of business, but it would be much harder to sell your inventory.

The Department of Housing and Urban Development lends money to banks to make interest for themselves. Some programs are direct lending like FHA loans (where you put down 3% to buy a house), some are semi-direct like Fannie and Freddie loans, and some are what's called portfolio lenders (most banks) where they season their loans for 12 months and sell them to the Dept of HUD.

In other words it would be harder to get a loan without more money down and less money would be in circulation for loans. People who develop land with houses would have less money to borrow to continue to develop, and their current inventory would be harder to sell.

Dr. Paul's argument is that he would wean people off these programs, but people forget that more people own houses now than ever before (although they have the least amount of equity per family than ever as well). Many people don't realize how they rely on the Fed to borrow to buy houses.

Understandably so it would be safer for someone to buy a house with more equity, slower sales, and safer investments that you can definitely afford. People invest in real estate because it's safer than stocks. It would change that paradigm temporarily. People would find better short term gains for 10 years after the Fed in stocks and not in real-estate. I'm sure the paradigm the shift after the market re-stabilizes so it won't be an abyss.

I'm just saying we have to do what's right, and I know my business will suffer, but it's the right thing to do. I do want someone who knows more about the Austrian model of politics on how you can lend money like today, and I just can't see how it's possible.

 

[mikelovesgod]

I'm an investor. Honestly, all these bubbles and crashes are good for me to make money. However, what good is all this money if we continue to lose our freedoms and drive our country into bankruptcy.

Exactly, bubbles and crashes are good for smart investors, not dumb ones.

But I feel the same way... what good is the money without having a country I'm proud of and can raise my children? I just got married with a new one on the way, but the good of the country should come before personal gains.

 

[kimosabi]

The IRS is a part of the gov't. Real-estate related businesses aren't so the comparison fails but I know what you mean in principle. I wouldn't be out of business, but it would be much harder to sell your inventory.

The Department of Housing and Urban Development lends money to banks to make interest for themselves. Some programs are direct lending like FHA loans (where you put down 3% to buy a house), some are semi-direct like Fannie and Freddie loans, and some are what's called portfolio lenders (most banks) where they season their loans for 12 months and sell them to the Dept of HUD.

In other words it would be harder to get a loan without more money down and less money would be in circulation for loans. People who develop land with houses would have less money to borrow to continue to develop, and their current inventory would be harder to sell.

Dr. Paul's argument is that he would wean people off these programs, but people forget that more people own houses now than ever before (although they have the least amount of equity per family than ever as well). Many people don't realize how they rely on the Fed to borrow to buy houses.

Understandably so it would be safer for someone to buy a house with more equity, slower sales, and safer investments that you can definitely afford. People invest in real estate because it's safer than stocks. It would change that paradigm temporarily. People would find better short term gains for 10 years after the Fed in stocks and not in real-estate. I'm sure the paradigm the shift after the market re-stabilizes so it won't be an abyss.

I'm just saying we have to do what's right, and I know my business will suffer, but it's the right thing to do. I do want someone who knows more about the Austrian model of politics on how you can lend money like today, and I just can't see how it's possible.

Have you watched Money Masters or America: Freedom to Fascism?

Before anything else you have to understand the current money system.

 

[brent022]

As somone that has been in the mortgage industry for the past 5 years and is currently laid off due to the downturn I can see where your concern is coming from. I feel though mortgage companies and banks would replace any removed programs with competive products to what was removed (where there's a profit someone will make it). In addition if the income tax was lowered or completly removed many of the current DTI issues that prevent many people from buying a home would be alleviated.

The industry I would be most concerned for would be accountants, tax preparers, and IRS workers. Many of the industries that would be effected by Ron Paul's changes would loose goverment subsidy but on taxes they actually lose the product.

 

[nayjevin]

Many of the industries that would be effected by Ron Paul's changes would lose goverment subsidy but on taxes they actually lose the product.

I have less sympathy than maybe I should have for those who based their business careers on unsound principle. (I.R.S. agents, tax preparers)

 

[mikelovesgod]

Before anything else you have to understand the current money system.

I well understand how money works. I've seen both videos, but I study money, banking, etc. to know trends for my business. I have to study where the money comes from and how it flows.

 

[mikelovesgod]

As somone that has been in the mortgage industry for the past 5 years and is currently laid off due to the downturn I can see where your concern is coming from. I feel though mortgage companies and banks would replace any removed programs with competive products to what was removed (where there's a profit someone will make it). In addition if the income tax was lowered or completly removed many of the current DTI issues that prevent many people from buying a home would be alleviated.

The industry I would be most concerned for would be accountants, tax preparers, and IRS workers. Many of the industries that would be effected by Ron Paul's changes would loose goverment subsidy but on taxes they actually lose the product.

Ok Brent, great, a fellow traveler in the RE industry. Sure, it's not fun. I just think the fun would just begin. The aggressive A paper that Freddie and Fannie has with them still giving sub-600 scores 100% financing would long be gone. Most of those lenders wouldn't lend because they can't sell it overnight. Even though you can't do sub-prime under 620, Freddie and Fannie still allow it and give approval for it. Those days would be gone.

Wouldn't it also, with no tax return, make all loans stated so there would never be a DTI and hence they would hedge this by requiring larger down-payments. Just some thoughts because they couldn't prove income.

 

[csen]

I think it's problems like these that make it tough for libertarian/free marketers to get elected. Think about the "extremes" that many of us here would like to see:

1) Abolish the IRS -- loss of jobs for tax collectors, accountants, many who hold government jobs
2) Scale back the military -- "less safe," less jobs for people in the military and military-related industries (defense)
3) Get the government out of healthcare -- loss of coverage for millions of people
4) End Social Security/Medicare -- loss of income/healthcare for seniors
5) Get the government out of education -- loss of jobs for public school teachers, keep some kids from getting an education
6) Eliminate farm subsidies -- loss of employment for some farmers
7) Eliminate mortgage subsidies -- make home ownership much less affordable for all Americans
8) Abolish the Federal Reserve -- make the economy more unstable

The question is, do you buy into all of the above, or do you believe that by eliminating all the provisions the government has in place, you free up so much capital for individuals to do/afford a lot more than they could previously? By eliminating taxes we'd all have 40% more income and could buy more, save more, invest more, and create more jobs. By eliminating mortgage subsidies housing prices would fall dramatically, making housing much more affordable for first-time buyers and future generations. By getting the government out of healthcare and education we believe it would become cheaper and better, increasing affordability and quality, not decreasing it. By ending "senior welfare for all" we'd strongly encourage savings for the younger generation.

 

[Man from La Mancha]

Let's say they get rid of usury-compounding interest. Then if you wanted a $100.000 loan you would go straight to the government for that loan and they would charge you 6%, $6,000 for the service of the loan for 10yr yr so you pay back $106,000 at a much cheaper per month rate. Wouldn't that encourage sales?

Even if it wasn't gold based your labor to pay that loan off would give value to that money your paying.

I'm far from an expect on monetary subjects. I did like the Bishop in old England maybe 1200ad or whenever, I don't know but he was in a remote area away from the king that was economically depressed. He instituted a money system I think based on the local taxes that had to be paid, something of value. He issued money that was dated and it would go down in value by 10% every year the people would hold it. It forced the people to spend it and the economy sky rocketed . It encourage people to keep reinvesting in their community. People paid off taxes 10 years in advance. They would invest in many businesses so jobs boomed. I just thought this was interesting. When the King found out he stopped it.

 

[brent022]

Ok Brent, great, a fellow traveler in the RE industry. Sure, it's not fun. I just think the fun would just begin. The aggressive A paper that Freddie and Fannie has with them still giving sub-600 scores 100% financing would long be gone. Most of those lenders wouldn't lend because they can't sell it overnight. Even though you can't do sub-prime under 620, Freddie and Fannie still allow it and give approval for it. Those days would be gone.

Wouldn't it also, with no tax return, make all loans stated so there would never be a DTI and hence they would hedge this by requiring larger down-payments. Just some thoughts because they couldn't prove income.

second point first I don't believe it would go the all stated route, even with the loss of W-2's for income taxes there would still be W-2 type paperwork for SS and state taxes. For a worst case scenario though let's say there was no goverment created paper trail of income earned. I imagine we would see an increase in the employment verification systems already used that would let lenders get information on length of employment and income. They would need to be expanded most likely to accomodate additional data and previous work history but there are ways it could be done.

I agree there would be large changes to the system but I do believe that there will be other institutions willing to pick up the slack in regards to programs.

Ok well I just spent about half an hour writing and rewriting various scenarios on how the lenders would pick up the slack when I came to the conclusion that I have no idea. It would depend on a number of items. Things such as without goverment subsidy to the states how much do states increase taxes and do they do so through sales tax or property taxes. How does the credit industry in general respond and what new levels would they use to determine credit worthiness. Do we see a shift in demographics on where people want to live due to states controlling their own tax rates and if so how does that affect property and appraised values.

I have to say I don't think I can give an answer on this as it would depend on what steps are taken, what order they are taken in, and the amount of time between steps. It would mean massive changes in regards to how we see and deal with money and credit in every transaction. I don't know how it will go but I do know it will be different.

 

[Gee]

Why do you think Paul would ever get rid of Freddy and Fannie? I'm not too familiar with those organizations, but I'd say he'd keep them, and try to allow other parties to legally compete with them. The secondary mortgage market is obviously a needed and good thing.

Paul has never said he's just going to go in and axe anything, with the exception of taxes and war.

 

[Wyurm]

Our current system that is overloaded with government programs, excessive spending of money we don't actually have, and all the other resulting problems is alot like heroin. We as the American people are all like heroin addicts. Dr. Paul is suggesting we all go into a treatment program.

Heroin withdraw can be fatal to some and at the very least is extremely uncomfortable. However, if you don't stop using it, your chances of dying increase every day. If we don't stop we are going to suffer more and more. Sure there is some noticable benefit from using government programs at first, but then you just have to keep increasing the spending trying to equal that initial benefit, even though you never will achieve it. The only solution is to go into a treatment program (Dr. Paul as president) and ween ourselves off it.

The first step is to admit we are all addicts.

 

[ButchHowdy]

Even with our steady influx of newcomers, the Florida market remains quiet. And I'm apparently one of the luckier investors carrying only 1 extra home, even at 185K, well under the national average. From R.E. agents to mortgage brokers, everyone is stunned.

I like La Mancha's idea of rehabbing the usury system.

 

[Liberty]

Whenever taxes have been cut, revenues to the treasury have increased. This economy would boom without an income tax. Some may be able to actually afford buying a house.

 

[MozoVote]

Even with our steady influx of newcomers, the Florida market remains quiet. And I'm apparently one of the luckier investors carrying only 1 extra home, even at 185K, well under the national average. From R.E. agents to mortgage brokers, everyone is stunned.

I like La Mancha's idea of rehabbing the usury system.

Florida may be experiencing a net outflow of people now. Schools are enrolling fewer students. Families cannot afford to raise children and pay the high cost of housing. Retirees are becoming "half-backs" and move to Georgia and the Carolinas.

Nobody wants to pay the property tax increases, or the new insurance premiums. Citizen's Insurance (the government insurer of last resort) is the largest insurer in some counties.

 

[mikelovesgod]

Freddie and Fannie would be gone, yes. They are funded through the Dept. of HUD, which Paul wants to do away with and they are financed through fiat debt. There is no money to back on. Paul would shore up the debt to real currency which can be backed. Short term it would cause problems, long term the idea is as solid as a rock.

I had more time to think about it and here's my ultimate thought... Short term it would hurt, but not right away. By repealing the income tax people would use that money for their down payment. Initially this wouldn't work because people treat cash like garbage because everything you "need" is done by credit alone. People would learn to save cash and re-train their way of thinking that is fiscally sound.

That's the only solution really anyway. No more 100% programs, but people COULD put down 10% on a house far more easily because they save 33% on their income. The initial problem is that people would spend it like a freebie, and it would harm them in the short term because they aren't used to relying on the gov't to bail them out with aggressive loans.

Conversely, once people adjusted they would have down-payments immediately. Last night I wrote it all out...

Average salary: $3,000/mo
Debt: $500/mo
He could afford, according to bank ratios, a payment of $1250, or a $900/mo mortgage, and $350 for taxes/insurance called PITI for $1250 (this is all rough)

Bank would begin to require 10% down for aggressive pricing... BUT now we have $12,000 yr that we don't spend on taxes that we could use. Hence, it would take roughly 12 months to save for a house if they saved well. Very feasible and it puts the money in the hands of the people rather than the gov't. It would require personal responsibility with their money, and while that's a problem most of the time, I would trust myself before I trust the gov't.

I see the benefit of looking at it both ways.