Dear Representative Frank,
I’ve watched the evolving mortgage crisis from both near and afar. Near, in that I interestingly had taken a small mortgage on a piece of property before our financial meltdown…and it happen to be sold to IndyMac Bank. Afar, in that I follow trends in the real estate business very closely because of our two environmental companies.
Some observations:
1) We…meaning the U.S. government….seem to be doing very little to help responsible mortgage payers…not the one’s in default, adjust their mortgage debt into reasonable, responsible mortgages. By all civilized measures, IndyMac should have called me long ago to rewrite my mortgage in light of current financial conditions and real estate prices. It would be the RIGHT thing to do, it would be an easy way to stimulate the economy, it would adjust values to reflect the current situation (a situation not caused by normal supply and demand forces), and it would reward my responsible payment (when they have enormous numbers of mortgages with folks who do not and can not make their payments).
2) In order to restore confidence, we need to FIRST reform our regulatory system and restructure banking management and oversight.
3) This is a great opportunity to link real estate finance to environmental improvement…we need new standards for the appraisal industry and mortgage underwriters that incorporate ‘triple-bottom line’ principles into valuation. If we do not do this, we will only forestall the creation of more ‘understandable’ property values. Why not use our current situation to improve the intelligence of real estate appraisal and mortgage contracts.
4) Think about community development in everything you promote for the economy. We have long forgotten that our national economy is a function of the sustainability, resilience, and health of our local economies. Think small community and regional banks vs ‘too large to fail’ mega banks; think diverse industry based upon environmentally sound business models, think innovative infrastructure development rather than rebuilding transportation systems with the same old asphalt.
5) Think like a household. If you would not consider it for your household budget planning, then don’t think about it for the nation.
Very truly yours,
Rick Pace
Filed under: Finance
