4 Ways Obama’s Re-Election Will Affect Real Estate
Without a clear position statement from the President, we have to look at the recent actions of the administration. This will be the best way to predict housing policy for President Obama’s second term in office.
- Refinancing – In October, the Obama Administration revamped the Home Affordable Refinancing Program. The changes make it easier for homeowners to refinance their mortgage if they have bad credit or are upside down on their home loan. The most significant change was to remove the limit for seriously underwater homeowners. With this new program, the average homeowner saves $2,500 per year in interest. The President hopes the changes will have a stimulating affect on the economy and will help to stabilize the Real Estate Market.
- Mortgage Regulations – President Obama’s victory ensured the survival of the Dodd-Frank Act. Within the Act, new mortgage standards and rules are expected to be established in 2013. Most expect that the new rules will make permanent the current, tight standards. Only one-third of Dodd-Frank has been rolled out so I would expect addition changes. They could include higher bank capital limits and a push towards principal reduction.
- Mortgage Interest Deduction – The mortgage interest deduction will likely be scaled back for those in the highest income brackets, but not the middle class. Romney’s approach to this situation was to cap the itemized deduction for everyone at $25,000. This change would have affected many in the middle class. The President’s plan is to limit the deduction for the wealthy only. It would be difficult for any candidate to completely eliminate the mortgage interest deduction.
- Shared Appreciation – The idea of a shared appreciation loan modification may be defeated. This means that the borrower could get a principal reduction, but would have to share any appreciation with the bank. Shared Appreciation loans would reduce strategic defaults by borrowers looking for a principal reduction. This is a common sense idea that should get support from all sides. It is a win-win. Hopefully, it will not be lost.
What are Your Real Estate Market Expectations for 2013?
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