The Obama Administration recently proposed a new set of regulations which seeks to make sure that lenders are pro-actively working to create diverse neighborhoods of homeowners. If you read the proposed regulations and don’t suffer a mental fog, you are the lucky person. I know when I read them, my brain felt it does after eating ice cream too quickly. I am sure we are all familiar with that feeling.
Bret Wilkes, Executive Director of the League of United Latin American Citizens(LULAC), in a recent press release, stated in part, “That is why we appreciate the President’s position that any revisions to the lending market include provisions that ensure that our country’s future housing infrastructure can support all responsible Americans who qualify for home ownership, even those who are just now realizing financial stability.”
While I agree with Mr. Wilkes statement and the idea of making all housing accessible potentially to all home buyers, I must say that I find the Obama administration’s chosen method to be ineffective at best and a political ploy at worst.
The new regulations which are undergoing a comment period at the moment make lenders accountable for making sure that the loans they make to qualifying individuals and couples are for the purchase of properties which create undefined minimum percentile quotas for the makeup of neighborhoods. It is not spelled out what these percentages are nor the penalties if these percentages are not met. Also it does not take into account that it is Realtors and not lenders who aid individuals/couples in finding their home. Lenders usually come into a real estate deal only once an offer to purchase a property has been made. I am not quite sure that lenders will be able to control who buys what property where, especially if there are not enough qualifying buyers to buy properties in areas where housing, at the market price, is expensive.
Basically, I have the cynical belief that the real goal of the new Obama regulations are not to make it easier for Hispanics and other minority groups to find the house of their dreams but merely to hopefully find a new source of ammunition to attack the banking and home mortgage industry in order to be able to score political points in the remaining months of their administration.