Today's commentary - a view from 2008

This post is being written on November 6, 2008. It's my snapshot from the future for my readers to consider...

November 6, 2008, Washington, D.C. (AP)

The senate hearings on the real estate industrial complex's role in the nation's continuing housing bubble meltdown resumed today, after yesterday's stunning election victory by pro-reform candidate Evan Bayh over Vice President Rice, and in the midst of America's financial meltdown.

Commerce Committee co-chair Dan Inouye recapped in his closing remarks how the various pieces of the home buying process linked together in a corrupt way, with "tips" or promises of future business being given by corrupt real estate agents to corrupt real estate appraisers. This then followed up by corrupt mortgage agents who fudge paperwork in order to insure their clients qualify for loans above their means to pay. And finally these loans were purchased by the corrupt and now imprisoned officials at Freddie and Fannie.

"What we see in this cycle of corruption is a consumer, in many cases the most financially unsophisticated and financially challenged among us, having vultures of corruption circling around him as he shopped for a home that this group new was historically overpriced, but who were more interested in their commission than on the integrity of the market and the well being of this consumer" said Mr. Inouye.

"With housing prices now down 55% from their peak in July 2005, a mortgage default rate of 30% nationwide, and 22 million HUD homes now on the market, we can see the damage this cycle of corruption had on our economy and our citizens" continued Inouye.

"In addition, Congress shares some responsibility by passing the now-repealed no-cap-gains tax on homes held for 2-years loophole, and also the now-repealed mortgage interest deduction up to $1 Million."

Mr. Inouye summed up his remarks by relating his own housing story to illuminate the dire situation most Americans find themselves in today

"I own two houses, one in Hawaii that I've had since 1992, and a townhouse in DC that I purchased in 2003. My house in Hawaii appreciated at one point from the $380,000 I purchased it for to $1.6 Million in 2003, when I refinanced it, withdrew the cash proceeds and purchased my DC townhouse for $1.2 Million with the proceeds."

"At that point" continued Inouye, "on paper I had $2.8 Million in appraised real estate, $1.6 Million in debt, and $1.2 Million in paper profit. However, with the 60% decline in Hawaii and 50% decline in DC, my properties are now worth $1.2 Million, and falling, and I have $1.6 Million in debt, leaving my net worth on these two properties at NEGATIVE $400,000. I may have to declare bankruptcy, just as 34 million of my fellow Americans have done over the past two years and also 22 of my colleagues here in congress."

Hearings continue through this afternoon, however, it is assumed in the capital that the beleaguered President Bush, with 6% approval rating, will not be keen to sign any new housing reform into law before President-elect Bayh takes office in January.