With respect to minimizing governments costs, there can be no argument about selling on the open market being cheaper.
Let me ask you this, how can one actually determine the true market value without putting the home on the market itself? An appraisal is just that, only an appraisal. Thus it is quite intuitive to me that not putting the home on the open market is actually reducing the potential for profit.
Honestly it does not matter what the trend line is, or if there is an overshoot due to massive inventory. Rather, this is the expectation with a huge influx of inventory. However it is simply a matter of rolling the program out in stages to help reduce that issue. In fact inventory can actually be controlled down to a local market level if this is done correctly. Similarly with the rate of recidivism being what it is, the cost to keep a homeowner current, then do it again in 6 months or a year is not trivial. Moreover, you have not addressed all of the other defaults that most people who have fallen behind incur including county taxes, hoa, and/or mello roos. Again, it seems to me that the current homeowner being bailed out of these defaults in addition to the mortgage does not make sense. Once more, it seems obvious to me that the free market should be tested to see who the new owner should be.
As for the erosion of the property tax base, this is a huge problem. How can it be legal for someone to live in a home that has been revalued at a much lower price then the assessed value? Any astute homeowner will indeed be petitioning a lower tax based on the true value of the home. The government is paying the default AND accrued interest penalty to catch the buyer up as well right?
If the house is put on the free market and sold why would the house be boarded up for many months or years?
As for punishing irresponsible lenders… that is not my goal. I don’t care about irresponsible lenders. The government has already been abundantly clear that they are going to bail out lenders, not punish them. As for my approach, once the home is on the market and sold, the government is out of the picture. The buyer found a lender and bought the home at market rate with a TRUE MARKET determined mortgage, not some government subsidized rate.
