After Rep. Robert Dold (R-Kenilworth) met with local real estate industry leaders Tuesday to discuss the nation’s housing and mortgage crisis, four of five Democrats hoping to challenge Dold had ideas of their own to share.
Though Dold sees possible legislation as a solution to the difficulties being caused to people because home values are dipping below the mortgage balance on their property, he thinks relaxation of certain regulations now will give some quicker relief.
Dold also recognizes the current reduction of real estate values is one of the major problems for the economy as a whole. “There is no question as we look at the economy and jobs, housing is a big, important aspect to our economy.”
“We can do that but I’m not sure how quickly it would be,” Dold said about possible new laws. “What we can do is give community banks more flexibility. If the appraisal comes in at $470,000 instead of $500,000 maybe the person has to put 22 percent down instead of 20 percent,” he added describing a possible scenario.
Schneider Considers Housing Major Issue
As one of the five candidates seeking the Democratic nomination in the March 20 primary, Deerfield management consultant Brad Schneider sees an improved housing market as a major part of recovery.
“Home ownership is still the pinnacle of the middle class dream,” Schneider said. He thinks cooperation of lenders and homeowners with government assistance in tax policy will help. “We have to get them sitting on the same side of the table rather than fighting with each other.”
Schneider sees a reduction of the principal balance of some mortgages as well as smaller payments as part of the solution. He would add tax advantages into the mix for lenders that must take a loss by reducing the amount they will eventually be paid.
Waukegan community organizer Ilya Sheyman would go even further by passing legislation requiring mandatory mediation between lenders and borrowers under the auspices of the federal government.
“I support Sen. (Richard) Durbin’s (D-Springfield) cram down legislation what will require the reduction of principal,” Sheyman said. “The reduction of real estate values has hurt families.”
Tree Wants Banks to Reduce Loan Balances
Another candidate, Long Grove business owner John Tree, believes banks that made substandard loans that are now under water — a term meaning the loan balance is greater than the property value — should cut the principal.
“Underwater mortgage debt is one of the primary drags on the economy,” Tree said. “Banks are sitting on more than $1.5 trillion in capital reserves. It would take roughly $700 billion dollars for banks to write down underwater mortgages that they are largely responsible for creating.” Tree would have those banks subtract the $700 billion from unpaid bailout money.
Hainesville mathematician Aloys Rutagwibira, another Democratic candidate, is less willing to make accommodations to underwater mortgage holders. “Any modification without any prospect of income to continue making payments is just kicking the can downstreet,” he said.
A fifth Democrat, Mundelein attorney Vivek Bavda did not respond to Patch’s request for comments.
Dold is keeping an open mind about possible legislation to aid people with mortgage issues, including Durbin’s proposal.
“Congressman Dold is constantly searching for ways to address the housing crisis that is slowing down our economic recovery,” Dold Communications Director Stefani Zimmerman said. “He welcomes looking at the details of any serious proposal to evaluate whether it would be smart policy that is not weighed down by unintended or indirect consequences.”
In other campaign news Wednesday, the Democratic Congressional Campaign Committee named the 10th Congressional District as one of 18 “red to blue” races throughout the country for the Nov. 6 general election, according to DCCC Chair Rep. Steve Israel (D-NY).