Mortgage Broker and Climate Change Guru?
Following on from an article published on Warm Home Cool Planet a couple of weeks ago on mandatory Energy Audits in Austin, TX, we have noticed a growing movement amongst the real estate industry targeting the ‘Cap and Trade’ bill and any local ordinances that might obligate homeowners into performing an energy audit on their home or making energy improvements in their home before they sell.
Here’s one from Brian Brady ‘America’s No. 1 mortgage broker’: “Sadly, the theory of carbon dioxide emissions’ effect on climate change is accepted as fact by our politicians without rigorous examination of its merits. It’s easy to turn a blind eye on faulty legislation when it attacks “big business”. Cap and Trade, however, is much more restrictive than its supporters would have you believe. Your neighbor’s penchant for bay windows and your desire for key-lime green bathroom walls might just be at stake. ”
As in all cases where people attempt to sow doubt on the accepted fact of climate change, it’s important to consider the source of these opinions. It’s also worth mentioning that the scientific community, not politicians, are responsible for deciding what is scientific fact.
Mortgage brokers make their money from arranging mortgages for people who aren’t considered good risks by banks. (Which describes at least 50% of Americans at the moment.) The mortgage broker assumes the risk of the loan for a premium on the prevailing interest rates (usually in the form of ‘points’). Mortgage companies then package up these loans and sell them to banks so they can be traded as financial instruments like CDO’s (Collateralized Dept Obligations) which in large part were responsible for the near collapse of our financial system last fall.
Mr. Brady’s business suffers if anything gets in the way of him writing another mortgage and stuffing more dodgy paper into our already teetering financial system. To prevent that from happening, Mr. Brady has hauled the “man’s home is his castle’ trope out of the cupboard and dusted it off. According to Mr. Brady soon ‘the socialists will be invading your home and telling you how many light switches you can have’.
As a recent home seller (and potential home buyer) I can assure readers that the marketplace is already factoring energy efficiency into the price of homes. Anyone seriously considering buying our Central Square home asked our broker for recent energy bills so they could figure out what their total house expenses would be each month. A gas boiler tune-up performed the previous winter, and an Energy Star-rated air conditioning system resulted in our home energy bills comparing favorably to other homes with a similar square footage. As a result our home was sold.
Given his connection to the real-estate industry, Mr. Brady should know that potential home buyers are already performing something close to an energy ‘audit’ on every home they are considering for purchase. Local municipalities are simply reacting to current market trends and ensuring that everyone gets the information needed before they make a home buying decision.
Mr. Butler,
“Warm Home Cool Planet is of the opinion that no law in America should ever protect lime-green bathrooms.”
This pretty much proves my point. It’s not about the lime green bathrooms, it’s about the freedom to own, enjoy, and transfer property which is, a fundamental right our forefathers demanded from King George.
“Mortgage brokers make their money from arranging mortgages for people who aren’t considered good risks by banks.”
This is a false statement. Over 80% of our business is arranging loans sold to depository lenders.
“I can assure readers that the marketplace is already factoring energy efficiency into the price of homes.”
Another false statement. Most buyers are more concerned about purchasing a property thatis priced below the economic value of the asset (carrying cost V. income production)
Mr Brady,
Thanks for your reply. As you will note from my original post, at Warm Home Cool Planet we related your original article back to the situation here in Cambridge. Real-estate is still selling in this corner of Massachusetts. At the same time, buyers have become even more sensitive to the additional costs of real-estate ownership.
Due to the informed and educated population of Cambridge, energy costs are a priority for many residents as it allows them to reduce their monthly expenses while doing some good for the larger community.
It’s obvious from your reply that our concerns are rather different: Sections of the media have been talking about a real-estate ‘bubble’ for over 4 years. Yet the industry that surrounded home ownership–real-estate brokers, mortgage brokers and the people trading and profiting immensely off your original efforts–continued on a path that was obviously not sustainable. Sometimes in concert and sometimes individually, each party decided to ignore the warning signs to ‘maximize’ their profit.
This mind-set, that people should be ‘free’ to do whatever they want and the ‘market’ will make it all OK, has been discredited in so many ways over the last year. As a person who finances real-estate transactions, we would think you’d be the first person to appreciate that.
The only certain thing in the future, is this way of conducting business will lead to even more disastrous results if it is allowed to influence climate change policy in this country.
The fact that you have chosen not to address the issue of climate change either in your original article or your reply beyond claiming that politicians need to ‘study’ it before it becomes fact is telling. The scientific evidence has been flowing thick and fast for almost 20 years. Yet politicians on the state and federal level have only started to develop coherent policy plans in the last couple of years. Relying on just the business community or government to solve this challenge is not an option.
Each person in the community has a responsibility to lessen the amount of non-renewable carbon based energy resources they use. Government needs to be involved in guiding and promoting these efforts through policy that encourages energy smart decisions. Most people view this as a good and necessary thing.
“This mind-set, that people should be ‘free’ to do whatever they want and the ‘market’ will make it all OK, has been discredited in so many ways over the last year.”
How so? This past year proves the very point you’ve made; unsustainable business models must not be rewarded.
Feel free to submit an article if you feel strongly about any of the subject matters we cover here.
We are open to all points of view, particularly if they add something constructive to the debate on how we can make our homes, our businesses, and our institutions more sustainable.