In a recent article in the New York TIMES, problems besetting our industry were the main focus. Examples of people who had committed to purchase as yet unbuilt homes, free standing and condominiums,  and were now “trapped” by new FNMA/FHLMC Guidelines, which have made many financing programs much more restrictive, in terms of down payment and sales of project units. While I did not generally recommend 95% and 90% financing to many of my clients, such programs were a fact a life as recently as 18 months ago, and that high leverage was often the only way a family could purchase the home of their dreams. New Condominiums were not limited to 70% pre-sale, either.

So, when FNMA and FHLMC developed more rigid standards for borrowing, at this difficult time in the housing industry, I have to ask myself “why”. These entities are no longer owned by public stockholders. For all intents and purposes, they are part of our government. Yet, the very same government that has given lip service to the real estate recovery as being essential to an overall recovery permits these agencies to act in a manner which prevents real estate activity.

Who, if anyone,  is really benefiting from the new restrictions on residential lending? Certainly, the potential Buyer who has put down a deposit without a financing contingency is not benefiting. That deposit money is probably gone, as liquidated damages for the Buyer’s failure to perform. So, not only is the contemplated sale up in smoke; so is any other real estate purchase for the Buyer losing his or her Deposit. “No sale” hurts the realtor, the mortgage originator, the closing agent and, ultimately, the Seller or Developer, because holding on to the Deposit is a poor alternative to making the sale of the property in question at the contract price.

It is time for each of us, whatever role we play in real estate, to inform our elected representatives in Washington, DC that these restrictions need to be eased. Dropping interest rates, alone, will not stimulate a  real estate recovery. Programs with some leverage need to be brought back. Pre-sale requirements need to be lowered. If we sit back and allow these new restrictions to continue, we have no one but ourselves to blame for what happens to our industry. Make the phone calls; send the emails, petition the people you put in office. The stakes are much too high to sit on our hands.