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Old 02-16-2010, 06:07 AM
 
3,586 posts, read 6,537,684 times
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I'm a firm believer in capital markets. Everything will correct itself with supply/demand.

I for one think, the 2007 mortgage forgiveness debt relief act and debt cancellation was very bad for the real estate industry.

Why?

Because this floods the market with even more distressed properties. It gives people hope for an escape plan and while most people are in trouble, there's always been the potential for fraud, especially with self-employed people who tend to hide their income better.

I moved down to Florida a couple of years ago and purchased a home last year. I've seen a couple of self employed people from my neighborhood (homes vary from $500K-800K), and I know they have money. They send their kids to $18K a day private school. But the banks let them get approved for short sales. It's quite ridiculous. They just got back from a big cruise on that massive Oasis of the Seas trip. Those rooms run at least $2K a person and they took their family of 5 on the trip with them.

I'm just saying there's at least 10-20% of people out there who will take advantage of the situtaion and flood their "distress short sale homes" to the market.

Why not just let the homes go into foreclosure? It's the easiest thing to do. It takes the guessing game out of whether to pay for the mortgage. It takes the guessing game out of whether the banks will approved a sale or not. And most importantly, it takes more distressed sales off the market.

There's the reason short sales were not popular in the past. Because people would end up paying taxes on the short sales amount. That's a big deterrent to putting your home on the market.

Government intervention in the housing market has only made things worse. In my opinion, the real estate market would have corrected itself by the end of this year. By with this debt relieft act going on through 2012 and other government intervention, I don't see an end game to this real estate mess until 2012.
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