The biggest danger is a REAL collapse in prices, to the order of 50%-70%, when tens of thousands of “homeowners” with high credit scores say screw it, my score isn’t worth the $300,000-$500,000 that I am upside down.
NON-recourse debt for primary residences has been extended nationwide to refi’s if no cash was taken out as well as purchase loans.
Presidente signed the bill right before Christmas, but it got little coverage. It encourages FC’s ~!!
Call it immoral, call it moral hazard, call it what you want. Banks are writing down (and off) BILLIONS, and Paulsen tells FB’s to honor their loans ??
WHAT A SNAKE..protecting his buddies…
There is little that will cause prices to rise rapidly over the next 10+ years, and prices by 2015 are unlikely to be back to 2005 levels IMO. (in bubble areas)
The trading of mortgages at a discount DOESN’T affect the selling price of a house… On the rolls, a house that was purchased for 700,000 will show that as last sale, but few will know that the mortgage was sold for 50c on the dollar. (or less) and the borrower’s payment was cut 40%, still a good return for the bottom feeder..
Whatever the govt can do to keep people in homes and paying is their goal. It’s one less FC that will be empty and trade hands at a greatly reduced amount, which reduces the number of comps etc.
Better to keep people in that house and paying with an artificial propped up value, than having to admit it’s value is 30%-40% less, affecting entire neighborhoods and dragging down property tax income as well….
To avoid having to “mark to market” homes is the goal, and avoid millions from walking away becuse it just makes sense.
