What
the Democratic takeover means for housing | | |
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For years, the mortgage insurance industry has been
pushing for tax deductibility. It has come close a few times, only
to be denied. Perhaps not to jinx its chances during the lame-duck
session, the industry is keeping a low profile right now.
Hahn sees another positive coming out of a Frank chairmanship:
more scrutiny of title insurance companies, possibly resulting in
more reasonable rates for home buyers.
As far as the "not as good" aspects of a
Frank chairmanship, Hahn is circumspect. So is Allen Fishbein, director
of housing and credit policy for the Consumer Federation of America.
"I would look for hearings," Fishbein says. "I would
look for oversight and scrutiny of federal enforcement of lending
practices."
Playing defense
After years of Republican domination of Congress,
consumer advocates are accustomed to playing defense. Now the housing
and mortgage industries might find themselves in the same position.
"Housing is one of the most heavily regulated
industries in the world," says Jerry Howard, chief executive
of the National Association of Home Builders. "What that basically
means is we have issues we try to advance and we try to defend regardless
of which party is in power."
Democrats are likely to give looser rein to Fannie
and Freddie and to be more supportive of subsidized housing, Howard
says.
Those stances please home builders. Environmental
regulation is where Democrats find themselves at odds with home
builders.
"We believe that land-use decisions are best
made at the lowest possible form of government," Howard says
-- cities, townships, counties. "However, there are a great
many federal statutes that have serious ramifications for land use."
One of the chief bugaboos is strict enforcement of the Clean Water
Act. Democrats are more likely to embrace "extreme interpretations"
of that law, Howard says.
"In a Republican-controlled Congress, we think
many of those questions are likely to be answered in a more balanced
way, rather than in a Democrat-controlled Congress, where they are
more likely to be answered in an overzealous way."
Presidential election looms
Soon, attention will turn away from Congress and focus
on the presidential election, the first in decades in which none
of the candidates are running for re-election or are vice presidents
looking to step up. That means there will be a lot of uncertainty,
and that's bad for financial markets, says Thomas, the finance lecturer
at Wharton.
Thomas doesn't foresee a recession in 2007. "If
we're going to have a major slowdown, we'll see it at the beginning
of '08, and the reason will be simple uncertainty about who will
control the White House," he says.
Will that uncertainty be good or bad for interest
rates and the housing market? The answer is -- you guessed it --
uncertain.
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