Unfortunately I have posted over and over and over again that we have not seen the last of the shenanigans that our government will tote out to backstop the housing market.
It ain’t over yet as well.
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Now on the flip side I will say this. I would MUCH rather see incentives given to NEW MONEY entering the housing market rather then continuing to assist distressed homeowners. We have already seen that loan mods and reworks have high rates of recidivisim. That is a no brainer.
If we actually had a free market all of these homes would have gone to foreclosure, prices would have crashed and housing would become affordable. Unfortunately that is all theoretical because we all know that we would have a collapse of the financial system and our society would have some very serious problems in that scenario.
So to me, two things need to happen, prices need to come down AND the people who buy the new homes MUST be able to afford to make the mortgage payments. So part of the recovery needs to include quality buyers.
I am not really in favor of a blanket policy of everybody getting an incentive or tax credit to buy. I think it should somehow scale with the equity share you put in or something like that. That is, the less risk you pose of defaulting the more you should be “incentivized”.
Also to me investors should also receive incentives however they perhaps should be either collateralized in some manner or they should be subject to higher cash/financing ratios. I am not sure how but if investors are willing to put more hard cash into the deal then I am all for giving them a break.
Now with all that said, my REAL PREFERENCE is still to let the market adjust naturally with some provisions set up to keep society from crashing and burning. Not sure how to do that though.
I still believe the worst thing is to extend and rework loans and prevent foreclosures. The false illustration that people get thrown on the streets is b.s. Everyone I know who has sold short or foreclosed on now rents and spends a hell of alot less on rent then they did when they lived in the home they could not afford.
One of the tenants in my property was someone who lost her home to foreclosure. She is a great tenant, takes care of the place and pays rent on time every month.
