Nov
19
So much has happened since my last blog, I don’t even know where to begin.
So we have a new President and no matter how you lean, you can’t help but recognize the new sense of optimism and hope, regardless of weather or not is it misplaced. I have often written on the power of perception over substance in my previous blogs. I have lamented that how we perceive the market makes the market regardless of the reality of the day.
So with that all said, and with this knowledge that President-Elect Obama will change the economy (for better or for worse), in the immortal words of Shean Connery in the Untouchables, “…what are you going to do about it? That is just food for thought.
My real concern is HUD’s final proposal that I am fairly certain Congress will approve. HUD’s stated intent is to make the marketplace more competitive and then have that heightened competition filter down to the borrowers. It is rare that more government regulation ever makes a market more competitive. It is even rarer still that added regulation makes the process cost less. HUD estimates that their changes will save an average of $700 per transaction.
A bulk of their proposition is to have large lenders collaborate with large settlement service providers (mainly the 5 biggest title companies) to bring prices down. In another time this would be anti competitive and thereofre illegal. What is it now?
I frankly don’t get it. Fidelity Title is buying Landamerica and Chicago and Fidelity are already together somehow, so by my calculation there are really only 3 large title companies that control a bulk of the settlement service business in America. Bank of America bought Countrywide and Chase now owns WAMU, so how many large lenders are there? Bank of America combining with Fidelity to conspire to drive down prices to squash any small competitors doesn’t seem like a smart plan to me. Yes, prices will drop for a while for the consumer, but what then?
What will happen when most of the smaller settlement service providers (like me) are gone. Who then will be there to compete with the giants? No One, and without that competetion there will be no reason for them to keep their prices low. Naturally, prices will go up. This really is MacroEcon 101 and it is shocking to me that no one in HUD or Congress gets it.
Well, this industry used to provide hundreds of thousands of well-paying jobs. It really used to be an industry. Soon, if HUD gets it’s way, we will resemble WalMart. We will have hundreds of thousands of mediocre paying jobs and only a handful of well paying ones. If you chose to stay in the industry, you will have little choice. Work for the big guys or leave. Some choice!
Who cares if the average consumer will get lower closing costs. In little time, most of us won’t be able to afford a home anyway because we lost our jobs or companies.
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