The big news today is that President Barack Obama is proposing sweeping changes to the regulatory system that oversees our financial products and services industry. In addition to expanding the scope of some of the Federal Reserve’s powers to regulate large firms, Obama suggests that a consumer protection agency be created. One of the issues that such a consumer protection agency will oversee is that of home mortgage loans .

The main idea is to have mortgage lenders first offer traditional mortgages to borrowers, and help them find the mortgage that would best fit their situations . The Wall Street Journal offers this information on what could happen in terms of new mortgage regulations under a new system of oversight :

Mortgage brokers also could be charged with new duties, such as presenting homeowners with the best available mortgage loans and ensuring consumers can afford the mortgages . And the new agency could ban certain practices like prepayment fees or “yield spread premiums,” blamed for incentivizing brokers to steer borrowers to costly loans.

Any new requirements would be applied uniformly to all lenders in the industry , including banks, nonbanks and mortgage brokers. And the states would have the power to offer tougher rules than the federal agency.

This news comes on the heels of efforts by some in the Senate to pass a new $15,000 home buyer tax credit to be available to anyone buying a home. The housing market is a hot topic right now, and it is considered Very Important that matters in the housing and mortgage market stabilize, and that home buyers start buying homes again. A new tax credit would do that (in the short term, at least). And if new mortgage regulations actually pass, it may result in home buyers actually being able to keep their homes later on down the road.

Image source: Sean O’Flaherty via Wikimedia Commons

I am thrilled that one of the articles I wrote for Bankling, on the world’s richest pets, was mentioned by the Wall Street Journal Blogs. I’m thrilled. We bloggers do like recognition on occasion, and it is precisely why we tell everyone about it when it happens ;)

A lovely surprise for a Sunday.

Hope you enjoy the rest of your day, and that you are ready for a new week — and a new month!

It’s easy for sellers in the United States to be down our current housing market. Prices are down. Sales times are up. Foreclosures are up even higher.

But in Canada, residents view the U.S. housing market as one great investment.

You can read about Canada’s love affair with our housing market here, in a story in the Wall Street Journal. But, to sum it up, the Canadian dollar is strong and U.S. homes are cheaper than they’ve been in years. This combines to make U.S. housing a strong investment for Canadian buyers.

In fact, U.S. residential real estate is a great investment for scads of foreign buyers. I live in the Chicago area, and the city has long been a lure to foreign buyers. Some are looking for second homes, others just an investment property. It’s the same in most major U.S. markets.

So next time you hear about how bad the U.S. housing market is, remember this: Not everyone agrees.

Here’s a story sure to tick off those critics who say homeowners facing foreclosure largely brought their problems on themselves: Writing in the Wall Street Journal, reporter Nick Timiraos says that a growing number of homeowners are simply walking away from mortgage loans they can no longer afford, basically abandoning their homes.

But that’s just the beginning. These homeowners are then taking advantage of the slumping housing market to purchase a new residence — often one in the same neighborhood and the same size — for a far lower sales price.

You can read the story here. But if you don’t like reading about people working the system to their advantage, you might want to skip it.

Oddly enough, this move isn’t illegal. Mortgage-lending rules allow homeowners to purchase new primary residences before selling their existing homes. This allows homeowners to first buy their new home and then — in what is known as the “buy and bail” — stop paying the mortgage on their first home, letting it fall into foreclosure. In the end, the homeowner is left with a new house with a lower mortgage payment. Not a bad deal.

Problem is, while such a move may not be illegal, it strikes me as highly unethical. It’s also extremely unhealthy for a homeowner’s credit record. The foreclosure can stay on a person’s credit report for seven long years. Try taking out an unsecured loan if you have a foreclosure on your record.

This housing crisis has brought out a lot of bad behavior on the part of homeowners, mortgage lenders, real estate agents and government officials. The “buy and bail” plan is, unfortunately, just one more example of homeowners taking the easiest way out of a bad situation.

We in the United States are sick of residential real estate. And why not? Housing prices are falling, sales times are longer and foreclosures are rising. What’s not to be sick of?

But foreign investors still love the U.S. residential real estate market, at least according to this story by Aleksandra Todorova for the Wall Street Journal. According to the story, one in five real estate agents surveyed by the National Association of Realtors sold homes to international clients from April of 2006 to the same month this year.

Why is U.S. real estate so popular among foreign buyers? Probably because many foreign buyers think U.S. real estate is cheap these days.

So there is a bright spot in the U.S. market. You just have to know where to look for it.

If there’s one question I’m asked as a real estate writer more than any other, it’s the obvious one: When is the housing slump going to end?

Unfortunately, I don’t have a good answer. No one does.

There are predictions, though. And, unfortunately, they’re not happy ones.

Take a look at this story in the Wall Street Journal’s online edition. Written by June Fletcher, it says that, according to economists gathered at the spring construction forecast held by the National Association of Home Builders, the housing market won’t show signs of improvement until early next spring, at the earliest.

The statistics aren’t good. Homebuilders have slowed new construction to a crawl. Existing homes for sale are sitting on the market for months and months. Housing prices in several parts of the country are either stagnant or dropping.

This is all depressing, I know. But if you aren’t planning to sell in the next five to eight years, you can relax. The residential market is a deep slump now, for sure. But real estate markets change. If you don’t have to sell any time soon, you’ll be fine. You’ll still make money on your house sale.

And if you do have to sell now? Be prepared to break even or, unfortunately, lose a bit of money. It’s unfortunate, but it is a reality. This market is a terrible one in which to sell.

Say you’re a homeowner and you’ve watched as your house has gradually lost value during the residential real estate slump. Say you’re suffering every time you have to fill up your car with gasoline that’s constantly getting pricier. At the grocery store, everything, it seems, is more expensive. Then there’s your job; You’re wondering how long it’s going to be around.

Well, if you’re not stressed enough, what if some government official decided that it’s time to raise your property taxes?

Surprisingly enough, in this severe housing downturn, several governments across the country are proposing increases in homeowners’ property tax rates. You can read about it here in this story by writer Conor Dougherty for the Wall Street Journal online.

Why would governments make this questionable move? Because they’re facing their own budget gaps.

But still … Does anything prove how hopelessly out of touch so many governmental bodies are than proposing property tax increases when so many homeowners are already struggling to pay their bills and avoid foreclosure? I always thought the government existed to help people, not to continually gouge them.

If you’re a government official staring at a budget shortfall, find some other way to reduce it. Here’s a suggestion: Cut your salary. Cut the salary of the people who shuffle papers for you all day. Heck, cut some of your employees. So many governmental bodies are bloated and efficient. There has to be some room for cutting.

Any government official that proposes a property tax increase during these challenging economic times deserves to be voted out of enough — quickly.

About two years or so ago, a flock of developers descended upon downtown Chicago with plans to build condo/hotels. The developers practically had cartoon dollar signs flashing on their eyeballs when they talked about the potential of their high-rise projects.

More than two years later? Those dollar signs have disappeared. The condo/hotel market in Chicago has, with a few exceptions, mostly fizzled.

For those who don’t know — and that, I’d guess, is most people reading this — condo/hotels were all the rage a few years ago. Buyers purchase a condominium unit in a high-rise building. When the buyers aren’t using it, the owners of the condo building rent the unit out as a hotel. The theory is that buyers get their own condo — usually as a second home — and can then make some money off it when they’re not around. Best of all, the owners of the individual condo units don’t have to worry about finding guests to occupy the units when they’re out of town. The owner or manager of the building does that.

Problem was, developers quickly oversaturated downtown Chicago with plans condo/hotel projects. I wondered at the time, and asked several real estate professionals, how all these projects were going to survive? Some gave me rosy predictions that there was room enough for all these projects. Others were more realistic, telling me that most of the proposed condo/hotel projects would never come to fruition.

Well, to no one’s surprise, the less optimistic of these two camps was right. There are a few condo/hotels now operating in Chicago — Donald Trump’s Trump International Hotel & Tower being one notable example — but the vast majority of the planned developments whithered away during the real estate slump.

Three writers at the Wall Street Journal recently wrote an interesting story on those condo/hotels that were built, reporting that many of the buyers who’ve purchased individual condominium units aren’t happy with their investment. They’ve made far less money off rentals than they expected, and their units aren’t appreciating as quickly as they had hoped. You can read the story here.

The reasons condo owners aren’t making huge bucks off their purchases should be obvious: Most condo/hotels are situated in metropolitan areas that already have a large number of hotels available. There’s a lot of competition for that empty unit. Save for the busiest weekends, most empty condo/hotel units remain that way, empty.

To me, the condo/hotel boom-to-bust cycle is typical of the way the residential real estate industry often operates. Everyone rushes in on the latest fad, not giving much thought, if any, to problems of oversaturation or too much competition for a product.

And, sadly, it’s a lesson that I think the real estate industry is doomed to learn over and over again. The industry certainly hasn’t shown any indications that it’s able to learn from its past mistakes.

We all know it’s a terrible housing market. But did you know that the market is so rough it’s forcing many homeowners to dealy their retirements?

Reporter Jennifer Levitz, for the Wall Street Journal’s online edition, wrote a story earlier this week exploring this trend. According to the story, the number of older residents in the work force is steadily increasing. You can read the complete story here.

Apparently, as their homes lose value, older residents feel less comfortable retiring, even if they don’t plan on selling their homes.

Here’s even more evidence that this housing slump is more serious than many of the other downturns the industry has experienced. This one is having serious, long-term consequences. Let’s hope we’ve learned our lessons: It’s never good to have  housing prices inflate as quickly — some would say as artificially, too – as they did during the housing boom. The reason? It makes it that much more painful when prices return to a more realistic level.

The combination of a sluggish economy and higher heating costs is causing problems for a growing number of homeowners. A recent story by reporter Rebecca Smith in the Wall Street Journal’s RealEstateJournal.com says that more homeowners are falling behind in their heating bills. You can read the story here.

In the story,  a spokesperson with New York City’s Consolidated Edison placed part of the blame on the subprime lending mess. He said that people with rising mortgage costs sometimes put off making payments on their heating bills because they know, under New York law, their heat can’t be shut off during the winter months.