Resolve to fix housing market

Florida Foreclosure & Investor News

The troubled local economy of 2007 won't be missed in the new year -- unless things get even worse.

Let's hope they don't. Better yet, let's try to make sure they improve, with proactive policies and programs designed to avoid similar problems in the future.

In Southwest Florida, as in the state and nation, housing-related problems oppressed the economy in 2007. You know the symptoms: declining home prices; stagnant sales; job and business losses as the once high-flying industry deflated; pinched consumers; rising foreclosures; falling growth rate; an explosion of requests for food aid. On top of all that, state and local governments were forced to throttle down -- including layoffs -- after years of escalating tax revenues.

Even the Herald-Tribune shrank in the face of the dismal conditions.

It's difficult to go anywhere in town without bumping into a real estate problem. We stopped at a bakery the other day and the owner related tales of two friends in home foreclosure -- victims of bad timing and overconfident refinancing.

Clouds still loom

We wish we could say that things can only improve from here. But the truth is, significant financial clouds still loom as the market works off a supply glut and the nation copes with the mushrooming sub-prime loan mess and the looming credit crunch.

Expert opinion is split on whether a national recession is on the way, but there seems little doubt that another wave of foreclosures is coming as adjustable-rate mortgages -- overused in the housing boom -- reset. That will push monthly costs beyond what many families will be able to afford. Because billions of dollars in securities are tied to those loan payments, the impact could affect pension funds, institutional investors and many other Americans who thought, wrongly, that they were safe.

The bright side

It's not a pretty picture. Before you jump off the ledge of gloom, however, remember three things:

Sarasota, Manatee and Charlotte counties are blessed with attributes that will help the region weather the storm. These include natural assets (sun, warmth, beautiful parks, beaches) and demographic ones (a higher-than-average proportion of affluence).

We've been down -- and climbed back up -- before. Remember the recession of 1991? It, too, was painful, but it was followed by a remarkable wave of prosperity.

New legislation and reforms appear imminent, promising some help for struggling homeowners and the market.

Ideas to consider

Since the new year is a time for resolutions to improve and atone for past transgressions, here are several ideas that should be considered:

Accelerate relief efforts for those in danger of losing their homes. Push lenders to restructure or modify loans for primary residences, and provide legal aid to help this process. Generally, it's in the best interest of borrowers, banks and communities to avoid foreclosures.

Establish more responsible lending standards, including income documentation and clear consumer information.

Months ago, some states -- including Ohio, Maryland and Arizona -- created emergency task forces to tackle the foreclosure crisis. Florida (which has one of the worst foreclosure rates in the country) should consider this focused approach.

Toughen laws against mortgage fraud, and boost enforcement to hold violators accountable. (The FBI called Florida a mortgage fraud hot spot. Several notorious cases, including some in Southwest Florida, have been prosecuted.)

Investigate Wall Street abuses in the mortgage derivatives fiasco. Enormous profits were reaped through methods that destabilized the credit markets.

Develop better ways to track and contain speculative excess in housing markets.

Diversification is key

In the long run, diversification is key to endurance and recovery. A healthy economy is driven by the pistons of education, work force, high quality of life, good infrastructure and reasonable cost of living.

Southwest Florida's economic development investments have ensured significant progress toward these goals. Much work lies ahead, however, in finding ways to ease the region's persistent income gap, which strands most service workers far from the shore of affluence.

Many of these families are more vulnerable than ever as they lose their jobs -- and possibly their homes -- to the housing downturn. Let's not let the dawn of 2008 turn into their financial sunset.

For more information on Florida foreclosure rates and related articles, please go back to the Florida Foreclosure home page.

Article Source http://www.heraldtribune.com/article/20080101/OPINION/801010578/-1/newssitemap