Jun 19, 2012 13:52 EDT After being invited to a roundtable led by Shaun Donovan, the head of Housing and Urban Development, I was given the chance to tell him where he should be focused.
Open Letter To President Urges Him To Go Beyond Refinancing ReformJun 14, 2012 10:00 EDT
With the White House seeking public input on President Obama’s proposal for expanded refinancing on home mortgages, real estate attorney and legal commentator Roy Oppenheim urges him to be bold and seek out even deeper reform.
In a open letter posted on Oppenheim Law’s South Florida Law Blog, Oppenheim calls the President’s current push to allow more underwater homeowners to take advantage of today’s low mortgage rates a step in the right direction, although one that should have come much earlier in Obama’s first term.
“For once, the president is pushing a bailout that helps everyone, not just the banks,” says Oppenheim, “That’s a positive sign, but this legislation still fails to deal with the root cause of the housing collapse.”
Still Oppenheim calls the President’s focus on the majority of underwater homeowners who are still paying their mortgages important, saying they are often left behind in the government’s efforts to help people on the brink of foreclosure.
“These homeowners have been played for suckers, their only reward for trying to do the right thing has been unconscionable interest rates,” Oppenheim explains.
The President’s push to ease refinancing restrictions for all homeowners, not just those who have loans backed by Fannie Mae and Freddie Mac can do tremendous good, he adds, but it still does not offer them substantial principal reduction.
“I suspect many will take the position that they don’t want to refinance if their homes are so far underwater,” Oppenheim says.
And the bottom line, according to the co-founder ofOppenheim Law, is if the banks were not too big to fail and too big to jail, that such legislation would not be necessary.
“You still have 5 large banks controlling over half of the country’s banking assets, and they have no incentive to compete for your business,” Oppenheim adds, ”As long as you’re dealing with securitized trusts, I’m not sure how the government will have the authority to get loans modified.”
In his open letter, Oppenheim goes on to say if the President is really looking out for the homeowners instead of the banks and their bondholders, then he should distance the United States government from the banks on Wall Street.
‘Capitol Hill now resembles some sort of human centipede of its own creation. We still can’t tell the difference between the government, the private sector, the Federal Reserve and the banks.”
“Refinancing reform is just another band-aid, and the housing market needs open heart surgery.”
So Oppenheim is urging the President to be bold and put the weight of his office behind breaking up the country’s largest financial institutions.
“If the banks were smaller, they would have to offer refinancing on their own as a way to stay competitive,” Oppenheim says, ”If the President want to get back some of the trust he has lost in this country, than cutting down the excess girth of these humongous institutions should be his top priority.”
Oppenheim appreciates that the President is even trying to do something about the housing crisis, because he feels Mitt Romney and his Republican challengers failed to adequately address the issue during their campaigns.
“When the GOP candidates campaigned here in Florida, they refused to offer any type of solution beyond allowing the market to ‘correct itself’, Oppenheim adds, “I respect the President for at least trying to do something.”
All Oppenheim wants to see is accountability and responsibility, both in the government and at the banks.
“Instead of encouraging the banks to compete, make competition a necessity,” he concludes.