In June of 2008, prior to the Fannie Mae/Freddie Mac crisis, I wrote this blog posting asserting that the president who would most impact progress in the housing market was not the winner of the 2008 election, but the winner of the 1932 election. I began as follows:
With the problems facing the real estate and mortgage industries, I look to the Oval Office to be the catalyst in the recovery of the nation going forward. I am not referring to President Bush, nor am I referring to the hypothetical Presidents McCain, Obama, or Clinton.
The president who will make the biggest difference in solving the current crisis is Franklin Delano Roosevelt.
It is hard to conceive that a free market, right leaning capitalist who abhors government bureaucracy like myself would invoke FDR. However, a realist with a rudimentary understanding of what makes our industry work will understand.
If you haven't guessed already, I would go on to refer to the FHA mortgage, which languished in obscurity in my market during the housing boom, only to be a lifesaver for countless deals after the crash. If you've done an FHA deal in 2009, or 20 FHA deals, you shouldn't thank Obama, Bernanke, or the mortgage goddess. You should thank FDR. The FHA was his baby, and it saw the country through the depression in the 30's and every decade until the last one, when the idiots who should have been the guardians of the money markets decided to play poker with our money. In other words, the lending industry decided to re invent the wheel with sub prime. I guess 70 years of success was boring.
I closed more FHA deals in 2009 than any year since 1999, when I was in another market. FHA used to be as rare as a hen tooth in Westchester. Now people breathe a sigh of relief when they hear those 3 letters. Not only is it back in vogue, it is the belle of the mortgage ball. And rightly so. Many of us had our bacon saved by the program the past 18 months.
There are those who disagree, but that is a discussion for another day. I'm with Tom Kelly, who said that the FHA rescued us in 2009. I expect more of the same in 2010, which is a good thing. We don't need to reinvent the mortgage wheel, we had the answer all along. Thanks to Mr. Roosevelt.
Happy New Year.