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Home Base
Most voters are very disapp  ointed with both parties,
and budget challenges will be daunting.
The November Congressional election will result in new leadership in the House of Representatives, and new priorities for Congress. Despite the substantial gains by Republicans, public opinion of Congress and of both parties remains low. By a 53% to 41% margin, more voters had an unfavorable opinion than a favorable opinion of Republicans, according to an Edison Research 2010 exit poll. In fact voter opinions of the Democratic Party, while also unfavorable, weren’t quite as bad (52% unfavorable vs. 44% favorable). Neither party will gain much advantage in the mind of the public over the next two years unless it is able to address the nation’s current challenges. What are those challenges? Forty percent of those polled identified reducing the deficit as the highest priority for the next Congress. Nearly as many (37%) said spending to create jobs should be the highest priority. These goals are obviously in conflict with each other to a great degree, as are other top voter priorities. For example, 48% of voters would like to repeal the recent health care reform legislation, while 47% would like to either maintain or expand it. As in previous elections, the party in power paid the price for great voter dissatisfaction with the economy, and with the performance of the federal government. President Obama’s public support has dropped dramatically over the last two years. By a 55%-to-44% margin, voters expressed disapproval of his job performance, and 38% indicated that their vote expressed their opposition to the President. It is interesting that President Obama’s current disapproval rating is very similar to the disapproval rating of both the Republican Party (53%) and the Democratic Party (52%). The very similar disapproval rating of the President and the two parties suggests that an overall sour public opinion of all incumbents was the main factor in the high Congressional turnover in the last election. The high public support for budget austerity expressed by voters in the election was closely followed by the November 10 bipartisan Federal Deficit Commission’s proposed massive changes in federal spending and the tax code. The Deficit Commission has an equal number of respected Republican and Democratic leaders who are committed to balancing the federal budget. The plan would save $3.8 trillion by 2020 and balance the federal budget by 2040. The plan is being refined and will be published in its final version in December. Like its members, most economists also recognize that unless we reign in the growing deficit, our nation will continue to lose jobs, and the future of our children and grandchildren will be bleak. Several other bipartisan federal deficit reduction proposals soon followed the Commission’s. A recent Wall Street Journal/NBC News poll revealed that many are skeptical of the details of the Commission’s preliminary recommendations. For example, 57% were uncomfortable with gradually increasing the Social Security retirement age to 69 over the next 60 years, while 41% said they were somewhat or very comfortable with the proposal. Everybody will be able to find parts of the proposal that they oppose, but most of us will find parts that we can support. What’s critical is that voters, as well as Democratic and Republican Congressional leaders, support the bottom line. Anyone, be they a politician or a voter, who doesn’t like specific parts of the plan’s tax increases and/or budget cuts should offer specific alternatives to minimize the pain and/or make up for the difference. For example, the American Homeowners Grassroots Alliance is concerned about the plan’s proposed $500,000 cap on the mortgage interest tax deduction. Home equity is the single largest form of savings for most homeowners, and those savings may eventually spell the difference between a reasonably comfortable retirement and dependence on federal safety net subsidies in some cases. For that reason the incentive may eventually save the government more in future subsidies than it loses through the tax deduction. AHGA believes that at minimum any mortgage interest cap should be indexed to housing values in a manner that wouldn’t reduce tax revenues. A flat $500,000 cap on the deduction would have little impact in many rural areas where you can buy one of the largest and nicest homes in the county for that amount. In pricey cities like Washington DC that will barely buy you a small starter home. A cost of housing index could be applied that would lower the cap in the areas when home prices are lowest and raise it in the more expensive areas. AHGA will look at how such a refinement might work out. We believe that it should enable at least 95% of homeowners to deduct all of their mortgage interest, and that would also assure that most of the remaining 5% would probably be able to deduct most of their mortgage interest as well. That may indeed be possible. If the refinement still leaves a large share of middle class homeowners unable to deduct all of their mortgage interest costs, then AHGA will propose some alternative revenue sources that would fund an increase in the mortgage interest caps. While we would like to keep all mortgage interest fully deductible, every segment of society, including homeowners, have to be willing to give a little if we are to be able to balance the budget. It may mean that the future owners of a $2 million, 6,000 square foot McMansion will only be able to deduct part of their mortgage interest. This is unfortunate, but perhaps it would help accelerate the trend towards building smaller homes, which are inherently more energy efficient. Some of the plan’s other provisions concern us as well, but we’ll also suggest other budget cuts and/or revenue sources to cover other modifications we might ask the Deficit Commission (or Congress in the future) to make. This debate will test the mettle of consumers, business interests and politicians. Many will speak out against cuts in their favorite programs or tax deductions, but will not offer alternative sources for revenue to make up the difference. We all owe it to the future of our country and future generations not to take such a gutless approach. Voters should certainly express their views on specific programs and taxes to their legislators, but at the same time they should insist that legislators support a plan that balances the budget, and come up with alternatives that are least painful to their constituents and most consistent with their own ideology to get there. Democrats no longer control both houses of Congress. Political leaders of both parties are on the line for addressing the deficit and other daunting challenges faced by our economy. What the Republicans won last month was not a leg up on the 2012 elections. Instead they won shared ownership of the potential credit or blame for Congress’s contribution to the solution of those challenges over the next two years. If House Republicans find a way to work with Democrats and address the federal budget deficit and other challenges, they will both get well deserved credit for their contributions. If they don’t, Republicans are very likely to find out in 2012, as Congressional Democrats found out last month, how soured voters react to a party in power that can’t get the job done. top
While home values remain challenged, this program is helping. Federal Housing Administration’s Mutual Mortgage Insurance Fund (MMIF) is helping to stabilize home values and is making a profit. The mortgage guarantee program grew by more than $1 billion, from $3.6 billion in 2009 to $4.7 billion in 2010. As a result of its performance the FHA will not require taxpayer subsidies even if the housing market worsens, according to independent actuarial studies released on November 16. This is good news for homeowners and rare good news for the housing sector. “I am pleased by the news in this annual report that the FHA has made financial progress over the last year,” said House Financial Services Committee Chairman Barney Frank (D-MA). “This progress is the result of bipartisan efforts since 2008 to strengthen and modernize the FHA and the Mutual Mortgage Insurance Fund and of the Administration’s commitment to taking actions necessary to maintain the FHA’s financial health.” Since July 2009, FHA implemented the most sweeping reforms to its credit policies, risk management, lender enforcement, and consumer protections in its history. FHA hired its first Chief Risk Officer and established a permanent risk office to expand FHA’s capacity to assess financial and operational risk, perform more sophisticated data analysis, and respond to market developments. FHA also increased enforcement of its lenders, changed the approval process making lenders liable for oversight of their mortgage brokers, and strengthened FHA’s lender approval requirements. Between September 2009 and June 2010, FHA insured 38% of all home mortgages and 9% of refinanced mortgages. Tightened credit standards are reflected by the fact that 57% of borrowers had FICO credit scores of 680 or more. While the tightened standards are obviously limiting the access by low- and moderate-income borrowers today, a stronger MMIF in the future will hopefully allow some relaxation of the current standards. In addition, FHA eliminated approval for loan correspondents and increased net worth requirements for lenders. FHA introduced a new premium structure that is more in line with private mortgage insurers’ pricing, and is estimated to provide approximately $300 million per month of additional capital to the MMI Fund. Furthermore, FHA has changed its credit score and down payment requirements to ensure that FHA provides access to borrowers who have historically performed well. Specifically, a minimum down payment of 10 percent is now required of borrowers with credit scores below 580 and applicants with credit scores below 500 are no longer eligible for FHA insurance. Over this past year, FHA: ● Served more than 1.75 million households by insuring $319 billion in single-family mortgages. This volume was second only to FY 2009. ● Enabled 882,000 families to become homeowners for the first time. This represents one-third of all first-time buyers in the nation. ● Helped more than 450,000 families avoid foreclosure through loss mitigation actions. ● Helped 556,000 families to refinance their mortgage at lower interest rates, saving households an average of more than $140 per month. ● Provided access to credit for close to 40 percent of purchase mortgages including 60 percent of all African-American and Hispanic homebuyers.
Focus would address a growing concern of consumers. Congressman Joe L. Barton (R -TX), the likely new Republican Chairman of the House Energy and Commerce Committee, has indicated that Internet privacy legislation will be a likely priority for Congress next year. Public concern about the protection of personal data has been growing, and this issue has now eclipsed concerns over technology issues. Driving the attention to the issue are major media revelations regarding widespread practices of a few companies. For example Google equipped its Google cars, which drive through neighborhoods in the U.S. and abroad snapping pictures of homes for the company’s Street View maps, with equipment that has also been gathering e-mail and passwords from residential WiFi networks. When confronted about the practice by federal regulators, Google said that the data collection was an “accident” and it would discontinue it in the future. It would not however start asking homeowners for advance permission before posting their home’s photos on the Internet, despite some personally embarrassing Street View pictures that have gone viral. In the case of Facebook, a social-networking website with 500 million users that promises privacy and personal choice, the company has been providing personal data to app-makers and their allies in the advertising and data-gathering trades. There are also a number of other cases where company security protections were breeched, and large numbers of consumer credit card numbers and other personal information were obtained by hackers. In addition to preventing these blatant privacy breeches, there is also the question of achieving an appropriate balance between the protection of private information and improving the efficiency of Internet Commerce, which benefits both consumers and businesses. “It would be great if Internet vendors had perfect knowledge of every consumer’s true needs, the discretion not to try to sell them products or services they don’t want, and a system that would provide consumers total, 100%, ironclad assurance that no private data would ever be misused or accessed by hackers” observed American Homeowners Grassroots Alliance President Bruce Hahn. Getting to that point is a worthy goal, and the outlook for progress in Congress next year and at the regulatory level is quite good. Unlike a number of other technology issues, support for the protection of consumer privacy is pretty much nonpartisan. Earlier this year outgoing House Energy and Commerce Internet subcommittee Chairman Rick Boucher (D-VA) and Rep. Cliff Stearns (R-FL) drafted a privacy bill that allows certain types of data tracking but requires consumer opt in before personal financial and medical data can be shared. Stearns will likely become the new subcommittee chairman. Although companies like Google and others that have demonstrated cavalier attitudes towards Internet privacy rights have close ties to the Obama administration, the White House has also signaled support for Internet privacy protections. The White House’s Subcommittee on Privacy and Internet Policy is drawing members from more than a dozen agencies to consider privacy issues relating to electronic health records, smart electricity grids and cloud computing. Populated by representatives from more than a dozen Departments, agencies, and the Executive Office of the President, the subcommittee will develop principles and strategic directions with the goal of fostering consensus in legislative, regulatory, and international Internet policy realms. AHGA hopes that the subcommittee will solicit extensive input from both consumer groups and companies in order to make sure that it understands all the perspectives on privacy. Only then will it be enabled to develop a balanced approach. “We are heartened by the prospect that there is a good chance for progress on a technology issue of great importance to consumers,” said AHGA’s Hahn. “In recent years many issues have been mired in partisan deadlock, and Congress has a real chance to make progress on this issue and help improve the public perception of both political parties. top
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Please take the time to contact your legislators and express your views on pending policy issues covered in this month’s Home Base. It's easy - you can reach your legislators by email in a couple of mouse clicks, and you can use the content in Home Base and elsewhere on our website to help you develop your message.
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recall their names. Is there a policy issue that is particularly important to you which significantly impacts homeowners or home ownership? We are updating our policy issues for 2011, and any member may propose a position on a policy issue, so please check the American Homeowners Grassroots Alliance's 2010 Issue Guide. If it isn't on the list, we invite you to send us an email and tell us why you think the American Homeowners Grassroots Alliance should take a position and work on it. Copyright
2010, American Homeowners Foundation and the American Homeowners
Grassroots Alliance. |
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