In recent months, a number of individuals have called for increased regulation of Wall Street–and it looks like we might get it.

After the recent government bailout of Bear Stearns, it appeared regulation was more necessary than ever for the financial industry. And today, the government announced a new plan to do just that. Although it’s been criticized for being too lax, it’s at least a start.

News also broke today that the U.K. and U.S. are teaming up to better monitor the international banking system, according to the Financial Times.

But why stop there?

Mortgage Mayhem

According to the Times, one major reason for implementing such a group was the growing concern  that the ratings agencies didn’t really consider the exposure of mortgage-based products or a housing drop-off.

That helped get us where we are today–in the midst of a financial crunch and a housing crisis, which both have fed off each other as both situations intensified.

Almost all the presidential candidates have called for greater transparency in the mortgage market; so has Treasury Secretary Henry Paulson.

The new financial industry plan proposes getting rid of overlapping state and federal regulators, according to BusinessWeek, and allowing the federal bank more liberties in looking at investment bank and brokerage firms’ books.

And yet, as the housing crisis rages on, there is a clear need for regulation in that industry, as well.

Appraisals that Add Risk

Take, for instance, any of the lawsuits in the past year that involve home appraisals. One was just filed in the Los Angeles Superior Court against KB homes in February by Debbie Bolden, her husband and neighbors.

• According to the San Francisco Chronicle, the suit alleges that KB Home (Bolden’s builder), Countrywide Financial Corp. (her lender) and affiliated businesses and two appraisers conspired to overstate home prices using fixed appraisals. The plaintiffs are seeking compensatory and punitive damages.

• Bolden feels she may have paid more than $60,000 over the home’s market price. And the lawsuit could get much bigger–the plaintiffs are trying to get class-action status for all California KB Home buyers who used Countrywide to finance home purchases from Aug. 1, 2005 to July 31, 2006.

The truth is, buyers who agree to use internal appraisers, lenders and other parties are asking for trouble–and so are companies who offer to provide them. Even those working with the most legitimate appraisers and most well-meaning lenders are opening themselves up to criticism–and potential lawsuits–as the slump deepens.

Yet some still do. Buyers are losing home value as prices slide across the country, and they’re not happy about it: Expect them to get more frustrated and more litigious until the market improves.

There have been some positive signs that the market is moving toward better practices–Fannie Mae and Freddie Mac, for instance, agreed earlier this month to only purchase mortgages from lenders that use independent appraisers.

Part of a deal with New York Attorney General Andrew M. Cuomo, the new rules–which go into effect next year–also prevent Fannie Mae and Freddie Mac-friendly mortgage brokers and real estate agents from choosing appraisers.

The agencies also will front $24 million to establish the Independent Valuation Protection Institute to register consumer and appraiser complaints and monitor enforcement of the new rules.

The new agency rules should help the industry–but regulating Fannie Mae and Freddie Mac alone won’t fix everything. Maybe it’s time for additional lenders, mortgage companies and others to become more independent; it’s definitely time for them to employ appraisers with no connection to their business or its success. Even appearing to have influence over an appraisal is a dangerous position to be in these days.

After all, sketchy loans and predatory lenders helped get us into the current housing situation; ignore that problem, and we’ll never fully get out of it. 

The Post-World War II generation is about to become the largest segment of Americans ever to age at one time, according to a recent Chicago Sun-Times article. In fact, 83 million boomers are expected to hit retirement age within the next 11 years.

That’s a lot of people hitting a new life stage–and undoubtedly, many of them will seek new living options, which could have a huge effect on the housing market.

Some will seek single-family homes in communities designed to offer seniors social activities; others who are perhaps not in the strongest health may seek out assisted care facilities, which offer a variety of living options from the very independent to the more medically supervised.

Senior retirement communities–which we’ve written about previously–have been a growing market in recent decades because they offer affordable living with social programming for the post-retirement crowd.

Take, for example, Shea Homes, a large U.S. builder that the Chicago Tribune reports feels Boomers are looking for communities that offer a positive environmental effect. Shea’s banking on it with its new Victoria Gardens community, which is announced last month.

The development–located between Orlando and Daytona Beach, Fla.–will feature homes with a carbon footprint 20 to 30 percent less than that of a typical household.

However, not all developers are so confident about the senior market. Although any reports of post-retirement and senior living communities experiencing huge drop-offs are hard to come by– analysts actually say occupancy rates have been the same and facilities have been able to raise prices because of a high demand for such services–some fear that the housing slump could affect that type of multifamily and single-family housing.

The stock market seems to agree. Shares of assisted-living facility operators have fallen in the past year. Shares of the largest U.S. private-pay senior housing provider–Brookdale Senior Living Inc.–declined sharply in the past year.

The stock troubles, AP reports, are due to concern that future customers will delay moving into facilities until the market improves and they can more easily sell their home.

Seniors may be able to delay moving into that cute retirement home, but for those in need of assisted living, the problem is more immediate.

The Social Security Administration estimates about 10,000 boomers a day–on average–will start collecting benefits for the next 20 years. Yet Social Security is still a mess–its trust fund will be needed to make payments by 2017, but the fund will need to spend its assets in 2027 and will be exhausted by 2041, according to Forbes.

Which makes it all a pressing mess for baby boomers: The Hospital Insurance Trust Fund is projected to need interest payments this year to fund Medicare patient hospital bills. It could be completely insolvent by 2019.

In that case, could assisted living become the only option for some retirees?

That may depend on how well communities prepare now for the baby boomers’ mass transition from work to retirement.

It doesn’t have to all involve public programs (although they likely will be part of the preparation, too): According to the Sun-Times, Chicago’s getting a number of new homes designed by local builders and area nonprofits for the elderly and disabled, who will have difficulty navigating stairs, exiting the shower and reaching high cabinets.

If senior residence prices and occupancy have stayed steady thus far–even during the housing decline–because demand remained high, doesn’t it make sense that we should focus on this market in the future?

We know that the number of Baby Boomers moving into retirement is set to grow considerably–which will increase demand for senior housing options. So what are we waiting for?

On Monday, housing information from the National Association of Realtors offered hope that the housing situation might be turning around. Existing home sales, the organization said, had increased for the first time in seven months.

However, we’re always cautiously optimistic at best–and given the housing data released today, that seems like a solid place to stand. The new data provided further insight, such as:

• Single-family home prices were down 11.4 percent in January from 2007 levels in 10 major metropolitan areas, according to the
  S&P/Case-Shiller home-price indexes released Tuesday by New
  York-based Standard & Poor’s.

• The overall 20-city composite index dropped 10.7 percent from 2007 in January. The January-to-December decrease was 2.4 percent. Miami and Vegas–two areas hardest hit by the housing slump–had the biggest drops.

• The Office of Federal Housing Enterprise Oversight said today that home prices fell 3 percent in January from a year ago. Home prices dropped 1.1 percent from December to January; New
  England showed the most severe declines.

Both reports painted a fairly bleak picture. Home prices fell year-on-year, and home prices fell from the month prior.

The new information also showed that the problem is still widespread. Note that one source found the deepest declines in the Southwest and in southern Florida; the other found home price problems were biggest in the Northeast.

A number of news outlets today, such as the Chicago Tribune, noted the possibility–based on yesterday’s National Association of Realtors data–that the housing slump might finally be turning around.(Although most were also quick to note it was too soon to tell.) Wall Street even got a boost from the news.

However, given today’s reports, it doesn’t seem like we should be celebrating just yet.

Because–in addition to the weak housing news–the Conference Board said today that the majority of the country doesn’t feel very comfortable with the current economy. People also aren’t too hopeful about its future. The board’s Consumer Confidence Index dropped from a revised 76.4 in February to 64.5 in March.

And that news did not give the markets a boost. In fact, it brought the dollar to new daily lows against other currencies, CNNMoney.com reported this morning.

So we wonder: Did yesterday’s news inspire you to hope the housing situation might be about to improve? Did today’s news make you think it won’t? Tell us what you think…

Kids or no kids, you can "recession-proof" your home by buying one in a high-ranked school district–according to a new report from real estate Web site Trulia.com.

The advantage of a good school system isn’t exactly a new thought–it’s one of the first thing parents will ask when viewing a property. But the fact it might help a home retain more value is interesting.

We’re in what many are calling the worst housing slump in 70–or more–years. If elementary education can actually protect a property over the long-term even for homeowners who don’t have any children, well, that’s worth noting.

Curious how your community measures up? Trulia.com yesterday released a list of the 9 best burbs for school systems and property values. The high-rankers are as follows:

• Boise–Median home price: $317,756

• Boston–Median home price: $379,000

• Chicago–Median home price: $334,900

• Dallas–Median home price: $235,000

• Los Angeles–Median home price: $559,000

• New York–Median home price: $1,075,000

• Philadelphia–Median home price: $199,900

• San Francisco-Median home price: $799,500

• Washington, D.C.–Median home price: $434,000

The company compiled information on over 2 million homes and newly launched education rankings on 125,000 schools across the country to complete the list; that’s a bunch of data.

However, it is a little surprising some high-end housing market choices made the list–like San Francisco, which I’m sure has a wonderful school system, but with a home price of almost $800,000, I feel a little strange about calling a value. (Even if homes in the area do retain their equity better than other areas of the U.S.–I’d suspect the fact that land is limited in San Francisco and the fact it’s a highly desirable place to live would also be factors in homes retaining their equity.)

What’s interesting is that the list also includes some suburban options. Take, for example, Chicago: the suburb of LaGrange, Ill. is listed as a top value, with a nearly perfect school rating.

Despite the fact the median home price listed for LaGrange–$440,000–is higher than the urban option, it’s reasonable for a Chicago suburb. I have a friend who relocated her family there from the city several years ago to make room for her first and, eventually, second child–and she found it to be one of the most affordable areas in the region, with good schools, a quaint downtown–overall, a decent deal.

In today’s market of declining equity–the median sales price in 77 of the 150 markets that the National Association of Realtors’ monitors
dropped during the last three months of 2007, compared to 2006, according to NAR–a school-fueled equity boost is a solid selling
point. (And one real estate agents and developers should be stressing
in all marketing materials and sales pitches–as well as something
appraisers and mortgage brokers should be considering.)

But you tell us: How big a buying factor do you really think a strong school district is? Where would you rank it on your list of property selling points?

The Fed yesterday announced a large rate cut, bringing the rate down to 2.25 percent–and the backlash already has begun.

• From NPR: "Fed officials are hoping that by making money
  cheaper to borrow, they’ll encourage investment and keep the economy
  from tipping into a recession — if it’s not already there."

Yet, as NPR points out, that’s easier said than done. In fact,
economist Richard Yamarone of Argus Research believes the cuts are a mistake because making money cheaper isn’t going to fix the mortgage losses that have crippled the economy, hurt confidence in lenders and reduced consumer spending.

Which would explain why the other cuts–at first lauded as a magical solution–didn’t seem to have a huge effect on housing or the economy.

• The Los Angeles Times worries about the rate cut’s impact on investments, noting that "as the housing market has crumbled and stock prices have slumped, many
  individuals and institutions have been hoarding trillions of dollars in
  safe, short-term accounts such as money market mutual funds and bank
  savings certificates."

Only the rate cuts just made those investments less profitable. Because the rate was cut from 3 percent to 2.25 percent, many savers will earn less than 2 percent on their accounts soon, according to the Times–the lowest return since 2005.

"Two percent is not going to make anyone very happy," Brian
Gendreau, a market strategist at ING Investment Management in New York, told the paper.

However, the Fed’s rate cut could possibly give Wall Street a kick, which it desperately needs. The cut could encourage investment into stocks and longer-term bonds–which could all eventually boost the general economy.

• And more criticism, from America’s heartland: Wall Street may get a push, according to the Indianapolis Star, from the rate cut–but it could at the same time increase fuel and raw material prices as the dollar’s value sinks overseas.

"There’s sort of a two-edge sword when it comes to cutting interest
rates,” Patrick Kiely, head of the Indiana Manufacturers
Association, told the Star. "Energy prices,
natural gas prices and raw material prices have made some pretty
astronomical jumps in the last 90 days, and they’re driven by the
degradation of the dollar based on interest rate cuts.”

That could cause serious problems in Indiana, which has the largest proportion of industrial jobs of any U.S. state.

Rate cuts have become almost standard in the past year; but are they
really helping? The economy has sunk continuously in the past year. The housing market is
still weak. And just Sunday, the government had to bail out Bear
Stearns with a $30 billion credit line.

The problem: If the Fed tries to fix a given sector with a rate cut, that cut is likely to hurt another sector. There is no blanket solution for our current, many-pronged economic situation. One thing didn’t cause the slowdown; one thing won’t fix it.

So we wonder: Was the cut a good idea? What do you think?