Obama’s refinance plan has NYC real estate pros taking sides

October 25, 2011 05:55PM

From left: Edward Mermelstein and TRD Publisher Amir Korangy
Is the housing market bound to correct itself, or does it need government guidance to get back in the right direction? That’s the question at the center of the debate over President Barack Obama’s Home Affordable Refinance Plan, which gives underwater homeowners wider access to the market’s low interest rates.

“What we’ve learned over the last couple of years is regardless of the regulation that’s put out to either force the banks to lend more or to loosen the regulatory measures, it hasn’t shown to have worked,” Edward Mermelstein, a New York City real estate developer and a partner and co-founder of law firm Rheem Bell & Mermelstein, told Multi-Housing News. “Let the market correct itself … the less interference that’s provided, the quicker that’s going to happen.”

However, The Real Deal’s publisher, Amir Korangy, took a different stance when weighing in on the debate. Though he acknowledged that Obama’s plan would punish mortgage-backed security holders whose loans are suddenly worth less, overall he thinks the plan is “a great thing for America.” He noted that the refinancing activity is good for the real estate business, and homeowners drowning under debt worth more than their homes can use the life jacket being thrown their way.

Moreover, Korangy is no fan of Mermelstein’s hands-off approach. “I hate it when I hear people say, ‘The only way this is going to work is if we actually let this thing run its course,'” Korangy said. “I don’t think that’s the right attitude — it’s just bad for morale.” [MHN]