Have the housing bears lost? S896 passes the Senate

[Lyra]

As much as I don’t want to believe it, this might be the last nail in the coffin of the housing bears. With the “safe harbor” (aka, “stiff the investors”) provision of this bill, I don’t see why loan servicers won’t start doing principal reductions en-masse.

Long term, this is still bearish for housing prices (because the principal reduction lottery winners will be able to unload their houses at low prices given their new low cost basis). But short term (next couple of years) it’s bullish (because it removes the current sources of affordable housing: short sales and REOs).

I have one question: is there any price cap on the “safe harbor” provision? e.g., does the safe harbor extend to $1M+ houses? It’s not clear from reading the text of the bill.

[carlsbadworker]

[quote=Lyra]Long term, this is still bearish for housing prices (because the principal reduction lottery winners will be able to unload their houses at low prices given their new low cost basis). [/quote]

Really? Are you sure? I have not heard of a principal reduction plan that will not ask for the reduction back when the owner sells the house for a profit. It just effectively turns the “owner” into a renter with a low monthly payment.

[carlsbadworker]

[quote=Lyra]Long term, this is still bearish for housing prices (because the principal reduction lottery winners will be able to unload their houses at low prices given their new low cost basis). [/quote]

Really? Are you sure? I have not heard of a principal reduction plan that will not ask for the reduction back when the owner sells the house for a profit. It just effectively turns the “owner” into a renter with a low monthly payment.

[carlsbadworker]

[quote=Lyra]Long term, this is still bearish for housing prices (because the principal reduction lottery winners will be able to unload their houses at low prices given their new low cost basis). [/quote]

Really? Are you sure? I have not heard of a principal reduction plan that will not ask for the reduction back when the owner sells the house for a profit. It just effectively turns the “owner” into a renter with a low monthly payment.

[carlsbadworker]

[quote=Lyra]Long term, this is still bearish for housing prices (because the principal reduction lottery winners will be able to unload their houses at low prices given their new low cost basis). [/quote]

Really? Are you sure? I have not heard of a principal reduction plan that will not ask for the reduction back when the owner sells the house for a profit. It just effectively turns the “owner” into a renter with a low monthly payment.

[carlsbadworker]

[quote=Lyra]Long term, this is still bearish for housing prices (because the principal reduction lottery winners will be able to unload their houses at low prices given their new low cost basis). [/quote]

Really? Are you sure? I have not heard of a principal reduction plan that will not ask for the reduction back when the owner sells the house for a profit. It just effectively turns the “owner” into a renter with a low monthly payment.

[jpinpb]

Begs the question, but what if they HAVE to sell for whatever reason, divorce, job transfer, etc?

Gives new meaning to mortgage slave.

[jpinpb]

Begs the question, but what if they HAVE to sell for whatever reason, divorce, job transfer, etc?

Gives new meaning to mortgage slave.

[jpinpb]

Begs the question, but what if they HAVE to sell for whatever reason, divorce, job transfer, etc?

Gives new meaning to mortgage slave.

[jpinpb]

Begs the question, but what if they HAVE to sell for whatever reason, divorce, job transfer, etc?

Gives new meaning to mortgage slave.

[jpinpb]

Begs the question, but what if they HAVE to sell for whatever reason, divorce, job transfer, etc?

Gives new meaning to mortgage slave.

[NotCranky]

[quote=jpinpb]Begs the question, but what if they HAVE to sell for whatever reason, divorce, job transfer, etc?

Gives new meaning to mortgage slave. [/quote]

Not enough. The people who would normally sell for lifestyle changes and such will not be doing much of that, unforced. Many people who would normally trade up will rent the house they are leaving behind.I am working with a couple like this right now. They would not have held on to the rental in a more average market situation. It’s foreclosures and short sales or drought for a while.

[NotCranky]

[quote=jpinpb]Begs the question, but what if they HAVE to sell for whatever reason, divorce, job transfer, etc?

Gives new meaning to mortgage slave. [/quote]

Not enough. The people who would normally sell for lifestyle changes and such will not be doing much of that, unforced. Many people who would normally trade up will rent the house they are leaving behind.I am working with a couple like this right now. They would not have held on to the rental in a more average market situation. It’s foreclosures and short sales or drought for a while.

[NotCranky]

[quote=jpinpb]Begs the question, but what if they HAVE to sell for whatever reason, divorce, job transfer, etc?

Gives new meaning to mortgage slave. [/quote]

Not enough. The people who would normally sell for lifestyle changes and such will not be doing much of that, unforced. Many people who would normally trade up will rent the house they are leaving behind.I am working with a couple like this right now. They would not have held on to the rental in a more average market situation. It’s foreclosures and short sales or drought for a while.

[NotCranky]

[quote=jpinpb]Begs the question, but what if they HAVE to sell for whatever reason, divorce, job transfer, etc?

Gives new meaning to mortgage slave. [/quote]

Not enough. The people who would normally sell for lifestyle changes and such will not be doing much of that, unforced. Many people who would normally trade up will rent the house they are leaving behind.I am working with a couple like this right now. They would not have held on to the rental in a more average market situation. It’s foreclosures and short sales or drought for a while.

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