Editor’s note: Looking ahead to 2010 we are optimistic that the real estate world will be better, but we also expect radical change. Paul Saffo, at the Institute for the Future, once said that in a two-year period less happens than we would have thought, and in a 10-year period more happens than we could ever imagine. This four-part series is a fun look at what the future may hold for the real estate industry. The predictions are not fact. (See Part 1: Where will we be in 2010?; Part 3: REM: The Real Estate Marketplace and Part 4: Visionaries pull back curtain on real estate future.)
The encrypted text message on my PDA read: “Send the electronic verification of your MDAA and we can close on the house today – 10:00 a.m., Monday, October 15, 2010.”
My MDAA (mortgage debt allowance account) had reached $5.9 million, so purchasing the small $3.3 million studio on the upper West Side of Manhattan was as simple as buying an online version of Michael Moore’s new documentary “The Heinz Heist of America – the John-Teresa Cabal.” It took four hours to transact my latest purchase. The cost is instantly deducted from my MDAA, reducing my real estate purchasing power. But tomorrow is a new day.
I owe you an explanation. Everyone, well almost everyone in the year 2010 in America, has an MDAA. It is a virtual personal portfolio, a complete economic profile, a combination profit and loss, and balance sheet on Brad Inman. It is dynamic; calculating my short- and long-term economic earning power and probability of future liabilities, and it changes daily–the same as my actual assets and liabilities. It is all accounted for in real time, including income, deposits, savings, retirement, home valuations, credit rating, employment history and anything and everything that has dollar and cents value related to me.
Tell us your prediction for real estate over the next 10 years and you could win one free admission to Real Estate Connect 2005 in New York City.
One of the cool features is the “lifestyle consumption meter,” which, using the latest RFID technology, estimates what products and services I am likely to buy down to a particular day or season into the future. I try to trick the LCM, but it is amazingly accurate. The only folks it cannot forecast very well are lottery winners.
You must consent to the creation of an MDAA because of strict privacy rules that were passed by the U.S. Congress in 2006. Your MDAA is treated much like your health records.
The account gives me a trouble-free way to buy and sell real estate quickly, and you cannot buy a home anywhere in the world without one. Quite frankly, I do not think I know who doesn’t have an MDAA. Landlords tap into the same system, so it is hard to live without one.
The World Bank, following the lead of the G7 Group, set global standards for MDAAs in 2007, which has made real estate purchases easy almost anywhere in the world. I own two homes in South America.
It is interesting how MDAAs evolved. Once Fannie Mae and Freddie Mac were privatized in late 2005, a surge in global secondary market intermediaries was created, hatching a round of financial innovation.
This mobile mortgage account is of course all digital and insured by title companies who provide all of the data that enables the real-time risk analysis. Consumers are responsible for the delta, like a deductible, between the real value of the account (asset appreciation or deflation) and your insured amount.
My account has never dipped below the minimum threshold, though friends of mine have and they have been forced to liquidate assets. In one case, a friend had to sell his house.
But in the government’s continued support for homeownership, this new form of what we used to call foreclosure is rare. Mortgage bankruptcy laws passed in 2007 protect homeowners from big losses. Thank you National Association of Realtors for that one.
The genesis or Version 1.0 of this virtual mortgage debit card was the clunky old bundling and packaging concepts from earlier in the decade. The title companies became the big players when the title business rapidly dried up in the 2005 real estate downturn. Fannie Mae and NAR also forced the hand of the title companies.
Like the end of polio, it is interesting to think that the last title insurance policy was written in the U.S. in late 2009. It is still offered in a few countries abroad.
I buy extra insurance coverage for “Minimum Asset Strength” on my MDAA from several different title companies that specifically protect my MDAA from wild fluctuations in home prices. The economist Robert Shiller retired to a far away island very rich after he created the Real Estate Futures System (REFS), which is the underlying housing market statistical index that calculates the actuaries on the insurance.
The MDAA grows and declines with your economic behavior. You draw down from it whenever you want.
I remember raging 20 years ago about signing and initialling 100 documents and having 50 different people touch my home sale. Those days are over. Now I buy a house with a debit card.
It is funny how the major banks completely missed out on this opportunity because of heavy lobbying from NAR.
Tomorrow: Real Estate Marketplace bid-rigging scandal unfolds in 2009.
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