The appointment of Mr. Smith implies that the future of real estate is in rent-to-own and rent-to-own.
“Since collapsing into guardianship in September 2008, Fannie and Freddie have received $ 151 billion in taxpayer assistance. More will certainly be needed.”
“If this Mr. Smith goes to Washington as director of the FHFA (Federal Housing Finance Agency), he will face a monumental challenge at a crucial time: how to protect taxpayers from even greater losses incurred by Fannie and Freddie.” .
(Gretchen Morgenson in the The Times of New York City)
Therefore, it appears that Joseph Smith, Jr. of North Carolina himself will be chosen to head the FHFA. What a thing! Someone has to do it, right? And when he looks for a job, the government seems to be the only people he hires, so it’s a logical step for him.
Who is this boy? I really have no idea. Recently it has appeared in the newspapers because of this appointment; all the articles about him say that he has a reputation as a “friend and tough advocate of the taxpayer.” I pay taxes to make it sound good to me.
You are taking over an agency that is losing approximately $ 6BA MONTH for the past 27 months! Obviously, this agency has to be part of the government because after the first quarter of losses of $ 18 billion (or year of losses of $ 72 billion), it would be difficult to keep your job in the private sector.
Anyway, what does your appointment mean? Let’s play your first day at work.
The first thing Mr. Smith does on his first day of work is ask his new secretary where the bathroom is and how many vacation days he has per year (everyone knows you can’t ask this in the interview!). The second thing he does is call his best men and ask them how the hell are they losing so much taxpayer money. Their answers can probably be summed up succinctly in a statement: “We guarantee a lot of bad loans to people who weren’t qualified enough to have them.”
Mr. Smith rubs his chin and says, “So in the future, we should probably start guaranteeing loans to more qualified people, right?” As his top lieutenants nod vigorously, ascend, and genuflect, he dismisses them from the room. “Sorry guys, I have to go. It’s time I took it down the street and hug some downtrodden taxpayers.”
His lieutenants quickly get together and surmise that “more qualified” probably means that Mr. Smith is saying that the FHFA should require “higher credit scores and down payments for loan applicants.” They pat themselves on the back for this reveal and scan the Washington Post to see what new DC restaurants would be good for lunch.
Back on Main Street, “more qualified” means that many more people will not be able to get loans to buy houses. It also means that many more people will not be able to sell their houses (it takes two to tango, right?). And it also means that real estate agents have to get used to doing less brokerage business.
So does all real estate agents need to pick up their gear and go home? Hardly! Consumers still need to be able to transact real estate; Last time I checked, people are still getting married, divorcing, transferring, investing, having children, sending children to the real world, etc. They need to be able to acquire and dispose of homes.
The opportunity for real estate agents in the next few years will be to place potential buyers (who cannot get a loan now) in houses that they will buy when they qualify for one; This means setting up rent-to-own transactions (also known as a lease or lease purchase option). Similarly, it means opening vacant home listings to rent-to-own tenants (also known as “rent-to-own”).
Mr. Smith will do everything possible to stop massive credit losses. He is implicitly communicating to the real estate community that rent-to-own and rent-to-own transactions will be the way to help clients achieve their goals for years to come.
Will your business change accordingly?