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Response to the State of the Union

From the Desk of the President & CEO:

CEOLast night in President Obama’s State of the Union address to Congress, the President said the American people were “tired of stale political argument.” I agree, Mr. President, we are tired. We are tired of the divisive language from our President. Instead of bringing America together to set forth on the path towards economic growth and prosperity, what I heard in this address to Congress was more of the same misguided, go it alone ideas as opposed to real job creating and economic growth policies.

First, raising the minimum wage will do nothing to bring people above the poverty line and ultimately will lead to fewer jobs, higher consumer prices, and reduced hours for those already working in minimum paying jobs. To add to that, not only will raising the minimum wage not produce the outcome the President so wants us to believe, the mandates required by his healthcare plan, the Affordable Care Act, coupled with a rise in the minimum wage, will cripple job creation. We are already seeing hours being slashed by employers who cannot afford to insure everyone that wants to work over 25 hours, add on an increase in the minimum wage and employers will cut hours even more, increase prices on products, and learn to work with fewer employees. All of which are very detrimental to our overall economy.

Next, the President likes to talk about income inequality. There is income disparity, but I argue not income inequality. Everyone that has a job, works a job for an agreed upon hourly rate or salary, no one is being forced to take a job without knowing the pay rate ahead of time. Additionally, if the President would actually lay out a viable jobs program, not just delivering divisive rhetoric, we would see real unemployment decrease and incomes increase. What we have today is a historically low job participation rate that skews our unemployment numbers. We need to get people back into the workforce, and the way to do that is through smart, thoughtful economic policies, not an increase in the minimum wage.
As the great late Ronald Reagan espoused trickle down economics, President Obama would like to try and rebuild our economy through bubble-up economics. What we need is a true jobs program, pro-growth economic policies out of the White House, and reasonable regulation. Instead, the President has created a hyper-regulatory atmosphere which has led to job loss, and hurts the very people he so likes us to believe he is trying to help, the struggling middle class.

I will close by commenting on the housing market and the President’s statements about implementing policies that will not allow for, or require, the American taxpayer to come to the aid of faltering financial companies. In 2008, as the recession was reaching its peak and our nation’s economy was on the brink of collapse, our government provided an infusion of capital by loaning the largest financial institutions, whether they wanted it or needed it, billions of dollars to be paid back with interest. That money has been paid back with interest, and the government actually earned money, it did not lose money. At the end of the day, the capital infusion was a win for all parties, the American taxpayer, the government, and our financial anchors.

Our housing market is slowly coming back around, but many Americans are still far from able to participate and take ownership of a home. As we continue with the over-regulation of the mortgage industry, we need to find responsible lending policies that help all American’s reach the dream of owning a home. It will take collaboration from both the government and the private sector, where there is shared risk. The President’s policies of pushing all the risk to the private sector, while the government holds the strings, will cripple any hopes of a return of a thriving housing market, and will leave lower income American’s thoughts of home ownership in their dreams.

I respect the office of the President, and have a great deal of respect for anyone who so chooses to be President, however, I believe our nation is in trouble. We have a President that chooses to bypass Congress and the will of the American people by ‘going it alone’ and governing by Executive Order. We have a polarized Congress that worries more about re-election than about doing what is right for America. Let’s agree that the time has come to toss politics aside to do what is best for all Americans, not just the President’s chosen few.

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Ed Delgado
President and CEO
The Five Star Institute


 

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Too Much…Way Too Much.

From the Desk of the President & CEO:

CEO

Yesterday, the Justice Department announced an agreement with JPMorgan Chase for a record-level civil settlement of $13 billion. Yes, $13 billion—the largest sum of money ever paid by a single company to the federal government.

Forget the state AGs’ settlement, forget the millions of foreclosures prevented vis-à-vis loan mods and short sales, and let’s absolutely forget the repayment of TARP (with interest) to the Treasury Department. Oh, and here’s an interesting tidbit: Many of the loans referenced as the basis for the government’s grievances were products of Bear Stearns and Washington Mutual. The same Bear Stearns that the federal government pleaded with Chase to acquire to assuage the reeling financial markets at the height of the housing crisis. Smart.

By all means, take another pound of flesh—or in this case, 13 billion pounds. Let’s keep punching the banks in the gut because, well after all, it must make somebody feel better. Not sure that any of that money is headed for the city of Chicago, where 1 in every 427 homes is in foreclosure or Miami, where it’s 1 in every 264. Look, I get it. Our financial institutions must be held accountable, but there is a difference between accountability and being bullied repeatedly.

I encourage responsibility by our financial institutions, and I also expect a responsible and reasonable government. I would urge the federal government to take into consideration the acts of stability put in place by our nation’s banks following the recession; the taxing, often thankless, work those throughout our industry have carried on in order to keep millions of American families in their homes; and the painstaking effort our industry is putting forth to satisfy a slew of new regulations.

It is time to move forward, come out of the past, and help our housing economy grow. The more we keep playing the blame game with the banks, the less confidence consumers have in our financial system, and our economy will continue to suffer.

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Ed Delgado
President and CEO
The Five Star Institute


 

  • Screwed by JPM

    You aren’t one of the people who illegally had your home stolen by these bastard PIRATES!
    Including our military troops while they were over sea’s serving!!!

    JPM deserves a hell of a lot worse that a 13 billion slap in the wrist for the Hundreds of BILLIONS they illegally stole!

    They continue to be under multiple federal investigations….why because they are so wonderful and public serving?
    Bull Sh*t

    Hope they all, from Jamie on down burn is hell or at least rot in a federal prison forever.

  • Laurie

    Time to move forward and get it right. Have some kind of down payment even if it is only 5% so buyers have skin in the game. Not enough loan mods done. Also as someone involved in short sales I can tell you the larger banks are still making everyone jump through hoops. Fax numbers to send docs to so they can claim they did not receive them. Constant push back on docs – long delays for decisions still. Although much better than 2 or 3 years ago – still difficult.

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CEOToday we honor all of the men and women who serve our military forces and our great nation. We are so blessed to live in freedom, and in a democracy where each and every American has the right to participate. I thank every member of our military, current and past, who has put themselves in harms way so that we may be free. Thank you, and God Bless.

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Ed Delgado
President and CEO
The Five Star Institute


 

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A Need for Standardization in the Treatment of Foreclosures

From the Desk of the President & CEO:

CEO

I just returned from Washington, D.C., where I met with congressional leaders, principals from consumer protection and housing finance regulatory bodies, and senior members of our federal housing agencies.

The discussions touched on a variety of issues, and the differences between the two political parties could not be greater. The Democrats I met with wanted to talk about bankruptcy cramdowns, while Republicans wanted to discuss getting vacant properties back into the marketplace. One issue that was addressed and that greatly impacts our industry—and homeowners across America—is the definition of abandoned properties, or should I say, the lack thereof.

The definition of an abandoned property is a key point in an overall challenge facing our industry—standardization in the treatment of foreclosures. I respect and support the preservation of state law versus federal law, and urge leaders to work together to develop a more balanced approach to foreclosures, leading to the betterment of homeownership across America.

Recently, the Five Star Institute, in collaboration with the Legal League 100 (a professional trade association of attorneys specializing in servicing and default-related matters), commissioned a white paper entitled “Effect of Extended Foreclosure Timelines on Local Economies, Communities, and Home Values,” which finds longer foreclosure timelines are resulting in increased community blight, slower housing recovery rates, and decreased economic growth.

The majority of homeowners in foreclosure—even in states with long foreclosure timelines—eventually end up completing the foreclosure process and leaving their homes, and many of these homeowners abandon their homes months, and sometimes years, before the foreclosure is finalized.

To have a more positive impact on the housing market—and our national economy—states need to look at the overall impact of these policies before dragging out the foreclosure process.

Let’s not only think about the homeowners facing foreclosure, but also of the homeowners throughout the community who suffer from a reduction in home values and a diminished quality of life in the neighborhood.

Common sense is not political, and should not be. Unfortunately, common sense is not prevailing in Washington, and we are all suffering. Let’s streamline the foreclosure process, define and reduce the number of abandoned homes, and preserve homes in foreclosure so they can return quickly to the marketplace.

As we continue to work through the aftermath of the crisis and address lingering challenges amid the market’s recovery, policymakers must take into consideration all homeowners, not just struggling homeowners. They must be mindful of the economic impact of their policies and make reasonable, balanced decisions that will benefit homeownership across America.

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Ed Delgado
President and CEO
The Five Star Institute


 

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A Vote for Sanity

CEOFrom the Desk of the President & CEO:

I was pleased to see the Senate failed to move forward with the nomination of Rep. Melvin L. Watt (D-North Carolina) to lead the Federal Housing Finance Agency, the regulator of Fannie Mae and Freddie Mac.

Acting Director Edward DeMarco has led the agency with success since August 2009 and is pursuing policies that strongly support the best interest of our nation’s housing economy. Most importantly, DeMarco has been a steady hand in times of uncertainty—remaining true to the independent status of the agency while avoiding undue political influence and partisanship.

DeMarco has stood up for the American taxpayer by blocking principal reductions on negative-equity loans held by the GSEs. And under DeMarco’s leadership, Fannie Mae and Freddie Mac are now profitable, and the government footprint in securing mortgages is shrinking.

A change in direction as our housing market is coming back would be wrong. We need stability, not a shakeup, and I encourage our leaders in Washington, D.C. to support Ed DeMarco and allow him to continue to fulfill the clearly defined and critically important mission of his office—to ensure the safety and soundness of the GSEs in support of reliable and affordable housing finance options for the American people.

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Ed Delgado
President and CEO
The Five Star Institute


 

  • An agent for FM

    One of the reason Freddie and Fannie are now profitable or showing a better bottom line is they have lowered commissions for the agents who manage their properties.On top of that each agent has to be responsible for up to 5 K of repairs for the properties and then wait to be reimbursed for as long as 6 months. Any entity can be profitable if they can borrow money interest free for their operating capitol, make someone else “pay their bills” and pay well below minimum wadge to the people who work on their behalf.
    Dig deeper into the whole process and you will see so many abuses on Freddie Mac and Fannie’s operations. Maybe Demarco needs to look at everything these 2 entities do. They are still shifting the debt responsibility on to the private sector, They just found a different way to do it,

  • Nhoj Yorlik

    Weak argument. Fannie and Freddie are great to work with.

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From the Desk of the President and CEO: 
Crash Averted—For Now.

Government leaders in Washington, D.C. averted highly detrimental consequences, for now, by passing, with bipartisan support, a bill that will raise the debt ceiling and bring government employees back to work.

I say ‘for now,’ as the deal funds the government, at sequestration levels, until January 15, 2014 and lifts the debt ceiling, allowing the U.S. to pay its bills and debts, until February 7. Stay tuned for round two of what we have witnessed the past few weeks.

As many people have pointed out, the government needs to cut spending, and pay down the debt. I absolutely agree. Unfortunately, the divide in Washington is not allowing for what is best for this country.

In 2011, the government barely averted a government shutdown, and every time we come close to hitting the debt ceiling, Congress waits until the last minute, bestowing the image of a dysfunctional organization, and creating a crisis. The world is watching, the markets are watching, and the credit rating agencies are watching. In the end, our reputation is tarnished, consumer confidence takes a hit, and our economy is greatly weakened.

As a nation, the toll we took over the past few weeks seemed rather minimal, however, in the eyes or our peers around the world, we are weakened. Our status as a world leader is diminished. And, the morale of our nation is damaged.

If Congress and the White House don’t find agreement within the next 90 days, and we once again run up to the deadline, our country will suffer much worse consequences than those of today. Sure, we have some flexibility, but once our government can no longer pay its bills, our credit rating will go down, and financial confidence in the United States will crash.

Following the Congressional votes, Obama said we should not govern by crisis, and he’s exactly right. But he should have gone further and said governing shouldn’t prolong a crisis.  In the years following the recession, the Obama Administration has governed time and again by crisis through hyper-regulation, and numerous lawsuits filed against American job creators, our nation’s banks. Much like creating a crisis by putting off governing, over regulation has slowed our economic recovery, as well.

Our economy is struggling to come back from the recession, our housing market is on the comeback, as well.

For our nation to continue to thrive, we need true leadership. Leaders with principle and conviction, but also respect and the ability to make balanced decisions that are best for the country as a whole.  What our country does not need, and cannot tolerate, are leaders in Washington who chose to create a crisis and play politics with our economy instead of working together to come to agreements and govern in a way that will move our country forward.

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Ed Delgado
President & CEO
The Five Star Institute

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From the Desk of the President & CEO:

CEO

The Theatre of Politics at
the Expense of the People

While many of us believe too much government is counter-productive to the overall well-being of the world, no government has a very detrimental effect as well.  The debacle playing out in our nation’s Capitol, leading to the shutdown of our government, is a prime example of the lack of leadership by all parties and political posturing with no thought to the toll it takes on the people and economy of our country.

If the shutdown is short-lived and an agreement is made to fund our government, the economic impact may be minimal, but the damage to morale is substantial.  The longer this plays out, the worse it becomes.  Mortgage processing will be delayed.  Buyers and sellers will be put in limbo.  Consumer spending will decrease as uncertainty sets in.  Investors will flee the market. All of which leads to a shrinking of our economy, hurting us all.

The next few weeks are even more critical.  Not only do we have a leadership vacuum in Washington where Congress cannot find common ground on how to fund the government, we face another standstill on raising the debt ceiling.  We are set to hit our debt ceiling in mid-October, and the need to raise it will set off another round of political ping pong and possibly force another government shutdown.  If Congress and the White House are unable to reach an agreement on raising the debt ceiling, we will default on our debt as a nation.  The government will be hard pressed to be able to pay Social Security and Medicare, let alone any other bills, and our economy, which is still recovering from the recession, will likely crash.

I stand on principle, and I stand for promoting best practices that support and lift up our great nation, but what is taking place in Washington is political theatre that does, and will continue to hurt the very people the government is to protect.  When government leaders fail to lead, the entire system breaks, and we all pay too great a price.

edsig
Ed Delgado
President and CEO
The Five Star Institute


 

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From the Desk of the President & CEO:

An End to Accusation

CEOI recently had the opportunity to address thousands of mortgage professionals and executives during the Five Star Conference and Expo. At the start of the Honors Evening program, I had the privilege of delivering opening remarks to the audience. We received favorable feedback from my comments – so much so,  that we wanted to share this speech with you.

“Good evening and thank you for joining us for our 10th anniversary of the Five Star Conference. We have been hit hard the past few years…with many across the industry being impacted, from agents and brokers to bankers and servicers and we are only just now beginning to see modest signs of improvement throughout the marketplace. But I’m here to tell you tonight, that this recovery is being threatened.  Threatened by hyper-regulation, overzealous investigations, rampant accusations, and impractical lending standards–all of which have resulted in declining market participation.

And yet, despite these threats, we should never lose sight of the fact that homeownership has been, and remains, a vital part of the American Dream. For certain, we must have responsible housing policies and sensible regulations, if we want our nation’s economy to heal and the housing market to thrive once again… and I believe that everyone here tonight contributes to the overall success of that objective.

But, in order to become truly successful, we must return to the business of encouraging homeownership – not hindering and discouraging the consumer. We must stop frivolous investigations by those who have become blinded by political ambition, stop the persecution of the banks, for it has become petty, stop throwing more and more regulation on top of a burdened industry that is frantically making adjustments to stabilize the housing system.

We must stop this negativity and obsession with the mistakes of the past, because it is this obsession that prevents us from getting on with the business of today–that of preserving and promoting one of the greatest freedoms we have as a nation–and that is homeownership.

I hope you will enjoy the celebration of leadership this evening and embrace those we recognize as true heroes. On behalf of the entire Five Star family thank you for your perseverance and commitment to excellence.”

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Ed Delgado
President & CEO
The Five Star Institute

 

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