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So lets see here what this program will do:
1. Encourage even more distressed properties onto the market
2. Still forgive short sellers debt owed on their 1099 forms
3. Give banks/investors money for approving bad investments/lending to people who they shouldn't have
4. Give people who should have never purchased a home in the first place what is essentially rental assistance to move (this is after more short sellers haven't even paid their mortgages for months trying to negogiate with banks)
Simply crazy ultra liberal policies.
Let the free market dictate the housing market collapse. We would be over the housing crisis by now. Instead the government is letting the housing market do a slow bleed.
So lets see here what this program will do:
1. Encourage even more distressed properties onto the market
2. Still forgive short sellers debt owed on their 1099 forms
3. Give banks/investors money for approving bad investments/lending to people who they shouldn't have
4. Give people who should have never purchased a home in the first place what is essentially rental assistance to move (this is after more short sellers haven't even paid their mortgages for months trying to negogiate with banks)
Simply crazy ultra liberal policies.
Let the free market dictate the housing market collapse. We would be over the housing crisis by now. Instead the government is letting the housing market do a slow bleed.
The rationale to do this is sound. I am sure that there will be some abuses, but the small amounts of cash proposed are not enough t get folks that really could wait out a recovery in prices to jump in.
Lenders are not being overly compensated and will still be reluctant to make deals unless they are fairly confident the home owners really are in bad shape.
All in all not too many changes, and not enough to say this will cause any growing calamity...
“A short sale provides peace of mind,” said Mr. Reddy, 32. “If you’re in foreclosure, you don’t know when they’re ultimately going to take the place away from you.”
Mr. Reddy still lives in the apartment complex where he bought that condo, but is now a renter paying about half of his old mortgage payment. Another benefit, he said: “The place I’m in now is nicer and a little bigger.”
I'm so glad that he could walk away from his financial obligations and poor decisions and be better off while the more responsible people in this country pay for his behavior and that of others like him.
Like everything else this administration is doing, this $1500 credit isn't going to help matters. It's just throwing good money after bad. Overall, it will probably hurt more than it will help.
I am also amazed by that $1,500 credit!!!! It has something to do with taking the oath of office. You get the urge to start throwing money, other people's money, away.
My eyes always start rolling when I hear "gov't the problem" or "gov't should stay out of the way" etc. But I agree in this case. The gov't should stay out of it, let the market get to its lowest level quickly, then start rebuilding. This slow bleed isn't helping anyone.
Could someone explain to me what is the point of propping up housing prices where people still can't afford them?
While I too feel that the 'incentive' of $1500 is ultimately coming out of all tax payer's pockets, and there is nothing about this that is 'deserved', there are larger points to consider.
I do not agree that $1500 will be an especially attractive inducement -- for people that truly need the dough I doubt this will cover even two months of rent. For people that do not need the dough it will be sort of an 'economic stimulus check' and they will spend it, hopefully on something that has a nice multiplier effect like a down payment for a car. Even it goes for a TV set or something that is still money put back into the economy...
The bigger picture is that word has not been sinking-in for folks that are badly underwater and they need /want to move the path that will do the least harm to THEMSELVES and to the BANKS and the broad real estate market IS DEFINITELY A SHORT SALE -- a real buyer that wants a home in decent condition will come to agreement with a motivated seller and the lenders / investors get punished for being too naive / lenient on the original sale / loan. This is of course not ideal, as in a perfect world the lenders that truly did their homework ought to be able to get satisfaction from the deceptive borrowers, as well as the other side of the coin where hapless buyers were deceived by unscrupulous lender(s) with inflated appraisals would be able to have their principle reduction and remain in their home. Little reason to believe that will happen, even if equity participation in mortgages comes into vogue the s
The world is NOT PERFECT and if this inducement helps to "rip off the scab" in a quicker and more efficient manner then we will no longer have the on going drag / spectre of untold thousands of upside home owners hanging over the housing market and lenders for years to come. My guess is that the White House will have to get some longer term changes in the tax code, as well as some additional legal requirements for lenders to have a bigger stick against determined fraudsters, but those kinds of legislative rule changes will not happen fast. This inducement will be a nice short term shot to increase the number of short sales and help get lenders out of their foot dragging ways. My guess is that very few people will get real bargains, as just like when retailers have their 'going out of business' liquidation sales the really "good stuff" gets snapped up fast and the stuff that should have clearenced out of inventory long ago is unsold even as the doors are chained shut for the last time...
Last edited by chet everett; 03-08-2010 at 09:41 AM..
Location: Mokelumne Hill, CA & El Pescadero, BCS MX.
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Well while we're at it, lets make sure that the mortgage interest deduction is abolished and the ability to deduct property taxes is taken away as well.
This is of course not ideal, as in a perfect world the lenders that truly did their homework ought to be able to get satisfaction from the deceptive borrowers, as well as the other side of the coin where hapless buyers were deceived by unscrupulous lender(s) with inflated appraisals would be able to have their principle reduction and remain in their home.
Sorry but I have a hard time putting all of the blame for this housing meltdown on banks. If they lied and misstated the terms or the payment amounts, that one thing. But ultimately the responsibility belongs to who ever brought the house. You should know your finances better than any bank. You know how much money comes in and how much you spend every week every month. Some people can handle a larger mortgage than they qualify for via some formula. Others may have enough income, but they will have to dial down their lifestyle.
IMO, the best way to handle this housing crises is to let it sink to the rock bottom. Then let it be known, prices are at the lowest and will not get any lower. Then and only then will people who want to buy will start buying. And put in some guidelines for proof of income - to protect people from themselves.
Could someone explain to me what is the point of propping up housing prices where people still can't afford them?
The point is to lessen the domino effect.
Houses rapidly worth 50% of purchase price: Foreclosures, bank closures, less spending money, decimated tax revenue-- on a much larger scale than what you see now.
The government is doing everything they can to [i]slow[i] the inevitable descent.
Very early on in all this, I said a good analogy would be a plane that lost both engines. You know it's hitting the ground for sure. The only thing that's a question is whether the pilot can land it or whether everyone on board gets killed.
Look around. The credit bubble lasted about 10 years. How many stores, restaurants, banks were opened in your neighborhood in that time? How many new houses were built?
The economic engine that drove all that is permanently broken. Right now, there is no other economic engine taking its place.
Government's trying to stave off the Greater Depression.
Disclosure: I'd be best served if prices just crashed, but this is my understanding of why they're doing what they're doing.
That and....Wall Street has Washington by the short hairs.
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