Bridge the Consensus Gap

Agreeing on a Course of Action Isn't Enough

November 1, 2009

A few weeks ago, I read a piece in The New Yorker about Richard Holbrooke, President Obama’s U.S. Special Representative for Afghanistan and Pakistan. Holbrooke described his management style to writer George Packer as "a form of democratic centralism, where you want open airing of views and opinions but once a policy’s decided you want rigorous, disciplined implementation of it." Too often, Holbrooke said, he sees the opposite. People fail to discuss their differences, reach a false consensus, but then continue to work at cross-purposes.

Holbrooke’s comments made me think about the current lending environment. From the beginning of the financial crisis, there seemed to be a general consensus about how to get housing back on track: Tighten qualifying standards so that only ready and able buyers could get a mortgage; modify delinquent mortgages when possible to avoid forcing people to sell or face foreclosure; and, when modification fails or isn’t possible, facilitate short sales.

Unfortunately, on the ground, where transactions are happening, there’s little evidence of genuine consensus. Yes, qualifying standards have been tightened—but to the point where even some well-qualified people can’t get loans. As for mortgage modifications and short sales, despite government incentives, a recent report from the National Consumer Law Center shows that these alternatives to foreclosure aren’t working as well as they should. NCLC studied 25 state and local foreclosure mediation programs and came to the conclusion that the programs generally lack teeth and, thus, aren’t particularly effective. If you’ve experienced the frustration of facilitating a loan modification or short sale, this isn’t news to you.

As our financial system works to right itself, the NATIONAL ASSOCIATION OF REALTORS® has emerged as a strong advocate for home owners, putting national media dollars toward getting inventory moving and providing financial assistance to help state and local associations establish foreclosure prevention and response programs. We need mortgage servicers in this country to join the cause and not just pay lip service to the idea of keeping people in their homes or giving them a dignified exit strategy.

And something else: I’m troubled by rumblings that vilify mortgage securitization. As I see it, securitization itself wasn’t the cause of the housing sector’s troubles—lax standards throughout the system were. We need to ensure that financial institution reforms preserve a responsible, sustainable system for financing homeownership.

Stacey Moncrieff

Stacey is director of content strategy for the National Association of REALTORS® and editor-in-chief of REALTOR® Magazine. In addition, she oversees the quarterly REALTOR® Association Executive magazine and manages a variety of e-communications for REALTORS® and REALTOR® association executives. She has been with the NAR for more 30 years, starting as an associate editor with Real Estate Today magazine, where she covered sales and finance topics.