Government: Trying To Tidy Up Real Estate Closet

     As I am sure you know, the government was not able to avoid the sequestration which forced the administration to make budget cuts throughout their programs. Therefore, the General Services Administration has increased its efforts to get rid of the surplus of government buildings throughout the nation; but before I go any further let me give you a brief summary on the General Services Administration (GSA) to make sure everyone has complete understanding when reading this post. Established in 1949, the GSA, an independent agency of the United States government, was formed to help manage and support the basic functioning of Federal Agencies.  Although the GSA is responsible for many different tasks and management operations, for the sake of your time I will only go over their roles in government real estate. In accordance with Title 40 of the United States Code, the GSA is responsible for promulgating regulations governing the acquisition, use, and disposal of real property and personal property. Therefore, in plain English, the GSA is sort-of like the Government's landlord.

     As I was saying above, the GSA has made a concerned effort to get rid of surplus government buildings across the nation but they have been seeking new ways of doing so. Since 2010 the GSA has sold hundreds of buildings, usually by putting them up for auction. However, lately they have been meeting with private developers in order to negotiate land swaps to reduce the government’s real estate portfolio while consolidating offices and saving money for taxpayers. The GSA's acting administrator, Dan M. Tangherlini, wrote in a staff memorandum that the goal is, “to maximize the value of our real estate assets and reduce our federal footprint.” Currently, the government owns about 14 thousand excess buildings and structures in which the GSA is currently working to dispose of. “What we’ve seen is more attention and focus put on this activity, in part because of fiscal constraints across the government,” Mr. Tangherlini said. “At G.S.A., we are asking ourselves if there are other ways to speed the process of disposal and get positive outcomes as a result.” 

     Although it seems like selling off a building would be easy, especially for the government, there are many issues standing in the way. The process can be bogged down by political, technical, and economic issues, some of which are unavoidable due to the process of the law. Before a federal property can be put forth for sale the federal, state, and local government agencies must first be given a chance to acquire it. The property must also be made available to shelter the homeless, which is under the 1987 McKinney-Vento Act. Federal environmental and historic preservation reviews are also required on the property. Once all of this process is completed the property can be sold to private entities. Therefore, it is not an easy task but the GSA is making a strong and strategic effort to clean out the government's Real Estate closet.

Obama Administration Requests More Lenient Lending Practices

     The Obama Administration is requesting that the banks ease up on those applicants who have weaker credit scores, stating that the housing recovery is leaving to many potential home buyers behind; in particular, young professionals who cannot qualify for financing. Since the burst of the housing bubble, home loans have become difficult to acquire due to banks requiring applicants to meet higher standards. Although it may not have been desirable to a good percentage of the population, it was more than necessary to get the U.S. back on track. It is understandable that everyone wants to have their dream home even if it means borrowing obscene amounts of money that cannot feasibly be paid back however, realistically that just does not work. We clearly saw the outcome of loose lending practices and it was a disaster to say the least. Borrow first and figure out paying back later is just not the way to go. Allowing unqualified people to acquire loans beyond their means is simply asking for a problem. The real problem here doesn't seem to be the borrowing but the fact that people NEED to borrow more and more which is a separate issue for the White House to discuss. 

     So, is the Obama Administration making the right call? The administration says that more lenient mortgage standards would not only help the housing recovery, but the economic recovery overall. While this would be a great idea, critics have put their two sense in as well and they believe an action like this could lead us right back to the risky lending that triggered the housing crash. The administration is working on getting the banks to lend to more borrowers by making use of government backed programs such as the Federal Housing Administration (more dependence on the government, of course). 

     The administration is working with the FHA in an attempt to create new policies that would make the banks more comfortable by assuring they will not face legal action or lose their guarantees if loans that conform to the program's standards later default. The administration is also hoping that Fannie and Freddie will jump on board as well. "If the only people who can get a loan have near-perfect credit and are putting down 25 percent, you're leaving out of the market an entire population of creditworthy folks, which constrains demand and slows the recovery," says Jim Parrot, the former senior adviser on housing for the White House's National Economic Council.

     This would all be great if there were no consequences for loosening up lending standards, but many remain very concerned.  "If that were to come to pass, that would open the floodgates to highly excessive risk and would send us right back on the same path we were just trying to recover from," said Ed Pinto, a resident fellow at the American Enterprise Institute and former top executive at Fannie Mae. 

Another Possibility:

Instead of figuring out ways to give people things they want but cannot currently afford, why doesn't the White House figure out some ways to create opportunities for people to be able to afford the things they want... "give a man a fish and he will eat for a day...teach a man to fish and he will never go hungry"... makes sense doesn't it?