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YOUR BOTTOM LINE

The Countdown to Florida; Fighting Foreclosure; Your Housing Costs; Are You Worse Off Than Your Parents?

Aired January 28, 2012 - 09:30   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.


CHRISTINE ROMANS, HOST: And good morning, everyone. I'm Christine Romans. Welcome to a special edition of YOUR BOTTOM LINE from Jacksonville, Florida.

The Sunshine State is home to a collapsed housing market and the site of the hotly contested Republican primary in just three days from now. Who is wining in the economy and who is best positioned against an increasingly populous incumbent president?

Plus, are you better off than your parents from your job, your savings and your debt? We're going to talk to a few younger voters about what they think the future holds for their generation.

But first, Florida primary just three days away. GOP candidates have been raining money in Florida and the Super PACs supporting them make it a deluge. And that's metaphor, really, since almost half of Floridians are already under water - under water on their home loans, that is.

Mark Preston is CNN's Political Director. John Avalon is a CNN contributor and senior political columnist with "Newsweek" and the "Daily Beast."

All right, I want to start first with this - this field. Mitt Romney, you say he defined himself, Mark, he defined himself in Florida at the debate - at the CNN debate, and he's turned the page. I want to listen real quickly to what he said - what he said that you think is a turning point.

(BEGIN VIDEOTAPE)

WOLF BLITZER, CNN LEAD POLITICAL ANCHOR: Is he still the most anti- immigrant candidate?

NEWT GINGRICH, (R) PRESIDENTIAL CANDIDATE: I think of the four of us, yes.

BLITZER: Go ahead, Governor.

MITT ROMNEY, (R) PRESIDENTIAL CANDIDATE: That's simply inexcusable. And actually Senator Marco Rubio came to my defense and said that ad was inexcusable and inflammatory and inappropriate.

Mr. Speaker, I'm not anti-immigrant. My father was born in Mexico. My wife's father was born in Wales. They came to this country. The idea that I'm anti-immigrant was repulsive.

(END VIDEOTAPE)

ROMANS: That was the moment, guys. Was that the moment for him to sort of take the - take the upper hand again?

MARK PRESTON, CNN POLITICAL DIRECTOR: This is why it was the moment. You know, obviously this election is all about the economy. It's all about people losing their homes.

But the Republican candidates have been distracted by issues such as immigration, legal immigration and Mitt Romney had been taking a lot of heat for that. Newt Gingrich seemed to get an upper hand on him.

And then what we saw in this debate this past week is that Mitt Romney defined himself as someone who is decisive. And a lot of people had thought that it was going to be Newt Gingrich who is the one who could go out and be decisive and take on President Obama.

And last - you know, this past week, we saw that, in fact, President Obama might have his hands full with Mitt Romney.

ROMANS: Yes. I mean, here's the thing. When people go into a voting booth or go to the polls next week, right, and in the general election, in this state, the jobs and the housing situations are two things. That's baggage (ph) they cannot divorce themselves from, right?

JOHN AVLON, CNN CONTRIBUTOR: That's exactly right.

ROMANS: So which candidate wins on that?

AVLON: Well, I mean, right now, everyone is in attack mode. I mean, you know, the campaigns are primarily attacking on issues, they're not necessarily as interested in proposing solutions.

But the Florida economic problem is profound. I mean, you've got a situation where, you know, almost 200,000 homes were foreclosed on last year. You've got more than half the value has been cut on people's homes. You've got unemployment went rate which went from four percent under Jeb Bush to nearly 12 percent in December of 2010. Now it's down to 10 percent but still ahead of the national average.

So Iowa and New Hampshire, those early state contests were comparatively good situation economically. The unemployment rates are half the national average. But now you get that frustration that comes from feeling you don't know where the light is under the tunnel. You don't know how you're going to get out when you borrowed against your home. That makes people angry. It makes them anti-establishment and it makes them very unlikely to support the -

ROMANS: And it goes even further than that. Because, you've got this issue where in Florida - and other states even in Florida, you know, tourism also has suffered as the economy has suffered. A lot of money from tourism is important for the budget of the state. Also, you've got transaction taxes from real estate that helps fund education. You know, if you've got kids in schools, all you know is that you're worried about losing to the counselor again this year because stimulus money is running out.

So where - so in the Florida state budget, we know the governor wants to add I think a billion dollars more to K to 12 education. I'm not hearing people talk about education in this Republican race so far. Is it because I'm not hearing it or are they not focusing on it?

PRESTON: It's not sexy (ph), right? I mean, for people to talk about, really, the nuts and bolts of education, it's not a sexy topic when you're trying to reach out to your base, right? And that's not something that you're going to hear from these candidates.

ROMANS: I want to talk to you about signs of recovery. Because several economists have told me, the next president, whoever that is, is going to be able to say the economy is better today, because no matter what, the economy is moving in that direction, you know, GDP last week and the housing sector.

Is the economy going to help or hurt this newly populist-sounding president who is really focusing on the things that the Occupy people have been talking about, student loans, fairness?

PRESTON: It's going to help, but it's all trend lines, right? So it's - the unemployment drops to 8.3 percent, 8.4 percent it's still very high. But if there's a trend ward down, that's going to help President Obama.

AVLON: That's right. And if you look at, you know, historic parallels, I mean, Reagan had very high unemployment, but the trend was moving in the right direction. The GDP growth was moving in the right direction. So it created a sense that maybe it was morning in America. Maybe the dark of night had passed. Things were getting better.

President Obama can say that things were worse three years ago than they are today. He can fairly say that. When he came in, it was really at that low point of the trough, if you look at where the economy was, the jobs loss was, so there's a story to tell.

ROMANS: There's a populace who said he made it worse.

AVLON: Yes. But - I mean -

ROMANS: They're both going to take that. They're going to look at the same parts and they're going to take - tell two different stories.

AVLON: Object - it's a question of, you know, how President Obama makes the case, it could have been worse because it is getting better.

What's interesting about the tact he's taking now is he's actually trying to fire up the base with his populist tack. Only 20 percent of American voters are self-identified liberates. So it's a higher climb than a conservative appeal to a conservative base. ROMANS: Right.

AVLON: But what he's trying to do with that Kansas City speech - Kansas speech and then the State of the Union is to say I'm the defender of the middle class. Mitt Romney is Mr. One Percent. The Republican Party wouldn't be looking out for those folks who are under water, struggling to keep above water. The middle class feels forgotten and squeezed for decades. That's the core of this campaign.

ROMANS: All right. John Avlon, Mark Preston, nice to see you guys. Get some sleep, we've got a big year coming up, right?

AVLON: Yes.

ROMANS: All right, next, Florida went to the forefront of the housing boom, now sits in the center of a housing crisis.

Plus, we'll tell you why you should be refinancing your mortgage right now.

(COMMERCIAL BREAK)

ROMANS: Florida's red hot real estate market was almost symbolic of the housing boom. And when the bottom fell out of the housing market, Florida fell first and hard. Home values have plummeted, foreclosures skyrocketed.

And at the center of all this are people, communities, cities trying to deal with the crisis. Cities like Jacksonville.

(BEGIN VIDEOTAPE)

ROMANS (voice-over): Real estate agent Scott Nicholas is busy these days. He's doing an occupancy check at this foreclosed Jacksonville house. The bank owns it and wants to get rid of it.

SCOTT NICHOLAS, REAL ESTATE AGENT: In some cases, of course, we learned that the tenants there living on the property who are completely unaware that it was in the foreclosure process. And, of course, that conversation can be - can be a little interesting. But for the most part, the properties are usually vacant.

ROMANS: House after house, street after street, 47 percent of homes here are under water, and half of all sales are homes in distress. No one is immune, not even real estate agents.

NICHOLAS: Many realtors have gone to the short sale process and the foreclosure process themselves. So this is not anything where it's just a specific niche in the community is having this problem. Everybody is. But right now, it's just tough and it's tough for everybody whether it's a foreclosure on a $20,000 house or $450,000 house.

ROMANS: Thousands of homes in the market, listings on the Internet show how a tragedy for many is an opportunity for others. Homes for as low as $5,000, and investors are scooping up entire neighborhoods. CHIP PARKER, FORECLOSURE DEFENSE LITIGATOR: Jacksonville is a beautiful, vibrant city, and it's being attacked by a cancer from within, house by house. And what we see in these neighborhoods, established neighborhoods and new neighborhoods, you start to see vacant houses, decaying lawns. You really lose a sense of community when your neighbors all of a sudden have gone.

ROMANS: Real estate professor Sid Rosenburg said the average home price here is down $80,000 from the peak.

(on camera): The foreclosures started before the job loss. Can you fix the housing market without fixing the jobs market?

SID ROSENBURG, PROFESSOR, UNIVERSITY OF NORTH FLORIDA: I think the job market is really the key. I mean, there's no question that if people don't have a job or even if people have a job and it's not really consistent and predictable, they can't really feel good about going out and buying a house.

ROMANS (voice-over): Tony Kronenburg is fighting to keep his house. He has an MBA. He understands finance. But the death of his wife and a loss of a job came just as the market collapsed.

TONY KRONENBURG, FIGHTING FORECLOSURE: Are you all set there?

UNIDENTIFIED MALE: Obviously Wells Fargo is the plaintiff of your case, OK? Now, Wells Fargo says in paragraph five, plaintiff as servicer for the owner and acting on behalf of the owner with authority to do so has the right to foreclose on your home. But they never tell you is who owns this loan.

ROMANS: Kronenburg says Wells Fargo agreed to a trial mortgage modification, reducing his payments in half, which he claims he's faithfully made. But soon the bank declared him to be in default.

KRONENBURG: I kept arguing with them and finally in frustration I just gave up because I had heard that, you know, if you don't make your mortgage payments, that's the only way you can get their attention. I can't tell you how frustrating it is.

ROMANS: For now, he'll continue to fight to keep this home, hoping the bank doesn't take it away.

(END VIDEOTAPE)

ROMANS: Mr. Kronenburg's situation, we asked Wells Fargo about it and this is what they told us. They said, quote, "We have made numerous efforts to work with Mr. Kronenburg to help him maintain home ownership and we will continue to try and help him find an option that will allow him to stay in his home."

The bank goes on to say that if people work with them early, they have a better - a better chance of keeping their home. You know, Chip Parker is the foreclosure defense litigator you just saw on that piece. We invited him to come on the program and talk to a little more about that. Chip, thanks for joining us. You hear this case is just one story. This is multiplied by hundreds if not thousands across the state and across the country, really. And what I hear over and over again is frustration from homeowners who don't really know how in the world to navigate this foreclosure process.

And you - you talked to Tony. He has an MBA. He understands these documents. He cannot figure out how to make it work. Is that isolated or that symptomatic - systematic?

PARKER: Well, it's definitely systematic. I see it everyday. I saw it two hours ago in a consultation that I had this morning with a gentleman who had a VA loan. The VA, of course, guarantees those loans. Citi Mortgage is the lender who has absolutely refused to work with this gentleman, even though VA guidelines mandated that before - that before VA will pay for a defaulted loan -

ROMANS: Would it be cheaper for them to work it out early instead of let it go as far as - I don't understand why the banks wouldn't be working very, very hard to make sure that this doesn't happen so that they're getting paid for a loan. They don't have empty houses where, you know, guys knocking on the door to make sure someone is there, there aren't people living in the garage.

PARKER: Well, the explanation is very simple, actually. The servicer, the Citi Mortgages, the Wells Fargos, those guys don't own these loans. They're owned by investors. The servicers merely act in a self- -- with their own self interest in mind.

A recent article - a recent (INAUDIBLE) article came out written by the National Law Center - the National Consumer Law Center that basically concluded that mortgage companies, mortgage servicers make more money foreclosing on a home than they do modifying a mortgage, and that's the problem.

ROMANS: All right. I want to bring in a real estate professor at Columbia University's School of Business, Chris Mayer. He's in New York for us. You know, welcome to the program.

I mean, you - Chris, you've heard - you've heard about what's happening in Florida, around the rest of the country. How does Florida compare with what's happening around the rest of the country? And this frustration with the banks, is it misplaced frustration? Is it because it's a whole new kind of system? The whole securitization process makes - because that's much more - I don't know - complicated. Will we ever get out of this if we don't fix the foreclosure thing?

CHRISTOPHER MAYER, COLUMBIA UNIVERSITY SCHOOL OF BUSINESS: Well, those are a lot of questions. I think clearly securitization is the real problem. If you look at the data on the practices of privately securitized mortgages relative to loans owned by banks, the same banks that will serve as a portfolio will be more likely to foreclose on behalf of the third party investor are more likely to modify or do a principal reduction when they themselves own the mortgage.

So, you know, they're exactly right that that's part of the problem is the incentives built into securitization. But, you know, I wouldn't push that too far, right? You've got - you know, in Florida with home prices down 50 percent and closer to 60 in some, you know, in some places, one in - you know, 22.5 percent of all borrowers are seriously delinquent or in some stage of foreclosure on their mortgages, this isn't only a problem of servicers, it is a broader economic and housing problem that would be happening no matter who was servicing the loans.

ROMANS: Well, Chris, let me ask you a question I asked in the piece to the real estate professor here in Florida, can you have a housing market recovery without a jobs recovery? And which comes first?

MAYER: Well, I think, you know, there's a lot bit of the chicken and egg problem, but I would sort of take a bit of the other side and I think if the sides they are consistent with the Federal Reserve's view on this, which is the housing market itself at this point is a significant drag on the economy.

If we were looking at a normal recovery right now, we would have seen several percentage points of additional growth because of construction that would normally take place. And unlike some people, you know, in Florida this is probably less true. Nationally, this is not just uniformly we built way too much housing that we have to work through. There really is just a significant problem with this sort of backlog of foreclosure.

All the people who are sort of facing foreclosures, somewhat the vast majority of those homes, somebody is living in. And so the issue is the instability of that ownership and the modification and, you know, that whole process is pushing prices down, even as we're in a place where, you know, we are seeing some demographic growth.

ROMANS: Chris Mayer, thanks so much. Chip, it's really nice to meet you. Let's talk about it again soon, because i think as we go through this campaign season, people are going to be heading - as we keep saying - to the ballot box the baggage about housing is no question.

All right. Your bottom line when it comes to housing, we don't know when it will truly recovery, but the signs are technically there. Record low mortgage rates, home prices down 30 percent on average across country from the peak, best affordability in some places in years. So the seeds are there.

If you can afford to buy, this might be that moment if you haven't been blown out already. Make sure that your, you know, that your credit's in tip top shape. The higher your credit score, the better your loan is going to be.

Also, shop around to find the very best loans. Try not just big banks, but also local banks, as well. Don't forget to factor in all of the closing costs that go into buying a home.

And if you're already a homeowner, refinance if you can as long as you have 20 percent equity in the home. You'll be able to get the very best terms possible. All right, that's the bottom line. Are you better off than your parents from your job, your savings and your debt? We're going to talk to a few younger voters about what they think the future holds for their generation. That's next in YOUR BOTTOM LINE.

(COMMERCIAL BREAK)

ROMANS: Welcome back to this very special edition of YOUR BOTTOM LINE from the University of North Florida in Jacksonville.

The Florida primary is just three days ahead. But before we look ahead, take a trip back in history with me for a moment with a line that has become immortal in presidential politics.

(BEGIN VIDEO CLIP)

RONALD REAGAN, FMR. PRESIDENT OF THE UNITED STATES OF AMERICA: It might be well if you would ask yourself, are you better off than you were four years ago?

(END VIDEO CLIP)

ROMANS: Wow. My next guest wasn't even born when President Reagan said that. Now, the question is then are you better off than you were four years ago, but are you better off than your parents? An existential question in the American dream.

With me now is Jose Barrientos (ph), along with Michelle Gandee and Matthew Brockelman, the president of UNF Student Government. Welcome to all of you.

First, major and party affiliation, independent, economics, right?

JOSE BARRIENTOS (ph), ECONOMICS, UNIVERSITY OF NORTH FLORIDA: In economics, yes.

ROMANS: And you just registered for the Republican - as a Republican in the primary. What's your major?

MICHELE GANDEE, POLITICAL SCIENCE, UNIVERSITY OF NORTH FLORIDA: Political science.

ROMANS: And you Matt?

MATTHEW BROCKELMAN, STUDENT GOVERNMENT PRESIDENT, UNIVERSITY OF NORTH FLORIDA: I'm Finance and Marketing and I'm independent.

ROMANS: Excellent. Student loans? Who's got student loans?

GANDEE: I do.

BARRIENTOS (ph): I do.

ROMANS: But you don't have student loans. Lucky you. So the question, are you better off today than your parents? I'm going to start with you. BARRIENTOS (ph): Well, as a first (ph) interracial college student, I think I am and I have three - one brother and two sisters and they're also coming to college so I think we're definitely going to be better off than our parents.

ROMANS: Do you feel that the American dream for you is alive and well? Do you feel like this is a country that's going to give opportunities for you and your siblings and that you're going to be able to build something and your children will build something bigger even bigger going forward? Is that opportunity there?

BARRIENTOS (ph): If nothing else that we're coming to college, also very positive about the future, with the economy and everything. So I think we are.

ROMANS: And education is the key, Michelle. But, you know, it costs ever more to go to college. Just the president this week at the University of Michigan talking about how he wants to make it - harder for colleges to have to keep raising tuition even as they, you know, have to borrow more money to go to school. How important to you is education for your key to the American dream?

GANDEE: I believe it's really important. I'm going to be the first in my family to go to, you know, complete college, and I think that we have way more opportunity than our parents did, especially with the ever-growing technology sector and the new sectors that weren't around 20, 30 years ago when our parents started.

ROMANS: But what if you have a bunch of student loans and you can't get a job for a year or two?

GANDEE: Well, then you just have to make ends meet. You have to do, you know? You have to keep that part-time job until you get - you know, you start your career path and that's what you have to do. I think Obama's new plan to try to keep the student loans around, I think it's a great opportunity for a lot of people.

ROMANS: Now, Matt, you had to have student loans.

BROCKELMAN: Correct.

ROMANS: Let me ask you this question. Are you better off than your parents were? Do you think you and your generation are better off than your parents' generation?

BROCKELMAN: It's hard to say. I think that the opportunity is definitely there. I think that one of the most important things is understanding where the economy is going. Obviously the things that my parents were able to get their degrees and then get their Master's Degree might not necessarily be the same thing that I would want to get my Master's Degree in.

ROMANS: You're going to get your Master's Degree. You're going to keep going.

BROCKELMAN: Yes, yes. My plan is to take a year off and then go back to graduate school, at which point I will have to incur student debt.

ROMANS: All right. I want to talk a little bit about the tone I guess and I want you to listen to the tone that's happening in presidential politics, but also the question being asked across America, just this sort of angst about the direction of the country. Listen.

(BEGIN VIDEO CLIP)

GINGRICH: How many of you agree that America is largely on the wrong track?

BARACK OBAMA, PRESIDENT OF THE UNITED STATES OF AMERICA: Anyone who tells you that America is in decline or that our influence has waned doesn't know what they're talking about.

(END VIDEO CLIP)

ROMANS: So you see these two themes that are going to play out over the next year, that we can be great and this could be America's century or, you know, no, that we've squandered what was a pretty - a pretty impressive history. Which is right?

BARRIENTOS (ph): When you see the facts, as long as the economy keeps growing, we're going to be better off than our parents.

ROMANS: Economics major here telling us that -

BARRIENTOS (ph): Exactly. Because I mean the GP Per Capita is going to keep growing and then that means that in general we're going to be better off. And the thing now is personally what everybody does to be able to do that, you know. So I think the future of the labor market is going to be very dynamic, much more dynamic than it was in the past. It's going to be up to every individual to do their best.

ROMANS: I'm hearing personal responsibility when I'm talking to kids on this campus, I mean it's all about you. It's what you can do. I mean, it's what - you get the degree, and then you have the student debt, and then you have to figure out how to make it work. Is that - is that how your generation thinks?

GANDEE: I think we're trying to be more optimistic about the entire situation with the economy and what it is now. You have to be aggressive in the job market. You have to be aggressive while you're still in college. You know, you have to keep on applying yourself to every opportunity that you would possibly get.

BROCKELMAN: Yes. And I think the discussion about personal responsibility is spot on. With all the debates going on, whether it's with Social Security, whether it's with Medicare or even access to education, our generation simply can't count on the government or can't count on others to do things for us. And that's fine, but we all need to recognize that. I think the sooner our generation can, the more successful we'll be in the future.

ROMANS: Jose (ph), Michele and Matt, thank you so much. All right. Next, our promise to you, this campaign season and some - some final thoughts from Florida next on YOUR BOTTOM LINE.

(COMMERCIAL BREAK)

ROMANS: Hello and welcome back to YOUR BOTTOM LINE at the University of Florida in Jacksonville, Florida.

Regardless of what happens in Florida, one thing is for sure. It's going to be a long drawn out campaign through the November general election. You're going hear a lot of proposals, a lot of promises.

And all of us here at YOUR BOTTOM LINE are going be here to set you straight on all of it and to hold the candidates accountable, and let you know what the law means to you, all in the spirit of making you smarter about your money and hopefully your vote.

YOUR BOTTOM LINE every Saturday morning at 9:30 Eastern right here on CNN.

All right, that's going to wrap things up for us this morning, but the conversation continues online. Find us on Facebook and Twitter. Our handle is CNNBottomLine. My handle is @ChristineRomans. Please follow me.

Back now to "CNN SATURDAY" for the very latest headlines. Hey, have a great weekend, everybody.

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