Refinance Bill Drastically Alters Market

[SD Realtor]

I can understand the logic… it is simply a kick the can down the road policy and is yet a continuation of policy that will not resolve the problem and simply hopes/waits for inflation to lift valuations.

The real answer lies in letting pricing adjust to an encumbered, unmanipulated price level. This will allow housing to form a proper healthy base which is the foundation of our economy (unfortunately).

Repossession of the homes and putting them on the free market will be painful but in the end will be the best. All of the hundreds of billions and by now even trillions of dollars that have been wasted could be used to subsidize families with help for rent.

SK as a side note I do not see how the actions of either president, Bush or Obama have done anything to promote a stronger dollar. It appears to me that if anything both of their policies have severely weakened the dollar. Perhaps as you stated the intent of congress is to promote a strong dollar but I am not so sure I believe that.

[Anonymous]

[quote=”SK”]I think the government’s job is to maintain a stable dollar and to help maintain a stable economy. A stable residential real estate market contributes to both. This policy would help provide stability to the market. (I’m sure there are those that will argue that it only puts off the inevitable. Maybe so. But it also could help delay enough foreclosures until the more inevitable employment paradigm shift occurs, and the inevitable next severe residential real estate drop never happens.)[/quote]

SK: Thanks for the response.

The tricky part is maintaining a balance. I lean toward free markets and very limited government involvement (just enough to limit fraud, etc.) I think we’ve learned that massive government involvement doesn’t guarantee stability.

My philosophical preference would be to just let the market take care of this – i.e. let the foreclosures happen as they may. (It probably would also provide me personal investment opportunities as RE prices continue to fall.)

But it’s not that simple. The government is already involved in a big way – through the GSEs – and we cannot unwind this without the government making *some* decision.

At this point, there’s no way the government can choose not to be a market participant – so even a “free” market solution cannot avoid being influenced by government actions. Which means the government will have to be involved more than I normally would want to see. I just hope they know when to stop.

[Anonymous]

[quote=”SK”]I think the government’s job is to maintain a stable dollar and to help maintain a stable economy. A stable residential real estate market contributes to both. This policy would help provide stability to the market. (I’m sure there are those that will argue that it only puts off the inevitable. Maybe so. But it also could help delay enough foreclosures until the more inevitable employment paradigm shift occurs, and the inevitable next severe residential real estate drop never happens.)[/quote]

SK: Thanks for the response.

The tricky part is maintaining a balance. I lean toward free markets and very limited government involvement (just enough to limit fraud, etc.) I think we’ve learned that massive government involvement doesn’t guarantee stability.

My philosophical preference would be to just let the market take care of this – i.e. let the foreclosures happen as they may. (It probably would also provide me personal investment opportunities as RE prices continue to fall.)

But it’s not that simple. The government is already involved in a big way – through the GSEs – and we cannot unwind this without the government making *some* decision.

At this point, there’s no way the government can choose not to be a market participant – so even a “free” market solution cannot avoid being influenced by government actions. Which means the government will have to be involved more than I normally would want to see. I just hope they know when to stop.

[Anonymous]

[quote=”SK”]I think the government’s job is to maintain a stable dollar and to help maintain a stable economy. A stable residential real estate market contributes to both. This policy would help provide stability to the market. (I’m sure there are those that will argue that it only puts off the inevitable. Maybe so. But it also could help delay enough foreclosures until the more inevitable employment paradigm shift occurs, and the inevitable next severe residential real estate drop never happens.)[/quote]

SK: Thanks for the response.

The tricky part is maintaining a balance. I lean toward free markets and very limited government involvement (just enough to limit fraud, etc.) I think we’ve learned that massive government involvement doesn’t guarantee stability.

My philosophical preference would be to just let the market take care of this – i.e. let the foreclosures happen as they may. (It probably would also provide me personal investment opportunities as RE prices continue to fall.)

But it’s not that simple. The government is already involved in a big way – through the GSEs – and we cannot unwind this without the government making *some* decision.

At this point, there’s no way the government can choose not to be a market participant – so even a “free” market solution cannot avoid being influenced by government actions. Which means the government will have to be involved more than I normally would want to see. I just hope they know when to stop.

[Anonymous]

[quote=”SK”]I think the government’s job is to maintain a stable dollar and to help maintain a stable economy. A stable residential real estate market contributes to both. This policy would help provide stability to the market. (I’m sure there are those that will argue that it only puts off the inevitable. Maybe so. But it also could help delay enough foreclosures until the more inevitable employment paradigm shift occurs, and the inevitable next severe residential real estate drop never happens.)[/quote]

SK: Thanks for the response.

The tricky part is maintaining a balance. I lean toward free markets and very limited government involvement (just enough to limit fraud, etc.) I think we’ve learned that massive government involvement doesn’t guarantee stability.

My philosophical preference would be to just let the market take care of this – i.e. let the foreclosures happen as they may. (It probably would also provide me personal investment opportunities as RE prices continue to fall.)

But it’s not that simple. The government is already involved in a big way – through the GSEs – and we cannot unwind this without the government making *some* decision.

At this point, there’s no way the government can choose not to be a market participant – so even a “free” market solution cannot avoid being influenced by government actions. Which means the government will have to be involved more than I normally would want to see. I just hope they know when to stop.

[Anonymous]

[quote=”SK”]I think the government’s job is to maintain a stable dollar and to help maintain a stable economy. A stable residential real estate market contributes to both. This policy would help provide stability to the market. (I’m sure there are those that will argue that it only puts off the inevitable. Maybe so. But it also could help delay enough foreclosures until the more inevitable employment paradigm shift occurs, and the inevitable next severe residential real estate drop never happens.)[/quote]

SK: Thanks for the response.

The tricky part is maintaining a balance. I lean toward free markets and very limited government involvement (just enough to limit fraud, etc.) I think we’ve learned that massive government involvement doesn’t guarantee stability.

My philosophical preference would be to just let the market take care of this – i.e. let the foreclosures happen as they may. (It probably would also provide me personal investment opportunities as RE prices continue to fall.)

But it’s not that simple. The government is already involved in a big way – through the GSEs – and we cannot unwind this without the government making *some* decision.

At this point, there’s no way the government can choose not to be a market participant – so even a “free” market solution cannot avoid being influenced by government actions. Which means the government will have to be involved more than I normally would want to see. I just hope they know when to stop.

[SK in CV]

[quote=SD Realtor]I can understand the logic… it is simply a kick the can down the road policy…

[/quote]

No. It isn’t. Kick the can would be reducing the interest rate or deferring interest and not adjusting the principle balance. Adjusting the principle balance turns (or at least may turn) an underwater loan into a good loan. Permanently. I don’t suspect there will ever be widespread principle adjustments, either as a result of legislation or otherwise. Even if congress were to reinstitute the cram-down provisions of the bankruptcy law, as applies to personal residences, it still wouldn’t happen very often. Even though maybe it should. But this doesn’t necessarily create only a temporary fix. It may very well be a permanent fix for some borrowers.

[SK in CV]

[quote=SD Realtor]I can understand the logic… it is simply a kick the can down the road policy…

[/quote]

No. It isn’t. Kick the can would be reducing the interest rate or deferring interest and not adjusting the principle balance. Adjusting the principle balance turns (or at least may turn) an underwater loan into a good loan. Permanently. I don’t suspect there will ever be widespread principle adjustments, either as a result of legislation or otherwise. Even if congress were to reinstitute the cram-down provisions of the bankruptcy law, as applies to personal residences, it still wouldn’t happen very often. Even though maybe it should. But this doesn’t necessarily create only a temporary fix. It may very well be a permanent fix for some borrowers.

[SK in CV]

[quote=SD Realtor]I can understand the logic… it is simply a kick the can down the road policy…

[/quote]

No. It isn’t. Kick the can would be reducing the interest rate or deferring interest and not adjusting the principle balance. Adjusting the principle balance turns (or at least may turn) an underwater loan into a good loan. Permanently. I don’t suspect there will ever be widespread principle adjustments, either as a result of legislation or otherwise. Even if congress were to reinstitute the cram-down provisions of the bankruptcy law, as applies to personal residences, it still wouldn’t happen very often. Even though maybe it should. But this doesn’t necessarily create only a temporary fix. It may very well be a permanent fix for some borrowers.

[SK in CV]

[quote=SD Realtor]I can understand the logic… it is simply a kick the can down the road policy…

[/quote]

No. It isn’t. Kick the can would be reducing the interest rate or deferring interest and not adjusting the principle balance. Adjusting the principle balance turns (or at least may turn) an underwater loan into a good loan. Permanently. I don’t suspect there will ever be widespread principle adjustments, either as a result of legislation or otherwise. Even if congress were to reinstitute the cram-down provisions of the bankruptcy law, as applies to personal residences, it still wouldn’t happen very often. Even though maybe it should. But this doesn’t necessarily create only a temporary fix. It may very well be a permanent fix for some borrowers.

[SK in CV]

[quote=SD Realtor]I can understand the logic… it is simply a kick the can down the road policy…

[/quote]

No. It isn’t. Kick the can would be reducing the interest rate or deferring interest and not adjusting the principle balance. Adjusting the principle balance turns (or at least may turn) an underwater loan into a good loan. Permanently. I don’t suspect there will ever be widespread principle adjustments, either as a result of legislation or otherwise. Even if congress were to reinstitute the cram-down provisions of the bankruptcy law, as applies to personal residences, it still wouldn’t happen very often. Even though maybe it should. But this doesn’t necessarily create only a temporary fix. It may very well be a permanent fix for some borrowers.

[SK in CV]

[quote=SD Realtor]
SK as a side note I do not see how the actions of either president, Bush or Obama have done anything to promote a stronger dollar. It appears to me that if anything both of their policies have severely weakened the dollar. Perhaps as you stated the intent of congress is to promote a strong dollar but I am not so sure I believe that.[/quote]

I didn’t say strong dollar. I said stable dollar. And I think it is the one of the functions of the government to attempt to maintain that stability. (I believe it is actually a direct charge of the federal reserve bank.) I don’t think it’s always an easy task. And with limited regulation, it’s not always possible. While it hasn’t always been done perfectly, the fact that we are by far the largest debtor nation, and continue to peddle that soveriegn debt to a willing foreign and domestic market, is evidence of at least limited success.

[SK in CV]

[quote=SD Realtor]
SK as a side note I do not see how the actions of either president, Bush or Obama have done anything to promote a stronger dollar. It appears to me that if anything both of their policies have severely weakened the dollar. Perhaps as you stated the intent of congress is to promote a strong dollar but I am not so sure I believe that.[/quote]

I didn’t say strong dollar. I said stable dollar. And I think it is the one of the functions of the government to attempt to maintain that stability. (I believe it is actually a direct charge of the federal reserve bank.) I don’t think it’s always an easy task. And with limited regulation, it’s not always possible. While it hasn’t always been done perfectly, the fact that we are by far the largest debtor nation, and continue to peddle that soveriegn debt to a willing foreign and domestic market, is evidence of at least limited success.

[SK in CV]

[quote=SD Realtor]
SK as a side note I do not see how the actions of either president, Bush or Obama have done anything to promote a stronger dollar. It appears to me that if anything both of their policies have severely weakened the dollar. Perhaps as you stated the intent of congress is to promote a strong dollar but I am not so sure I believe that.[/quote]

I didn’t say strong dollar. I said stable dollar. And I think it is the one of the functions of the government to attempt to maintain that stability. (I believe it is actually a direct charge of the federal reserve bank.) I don’t think it’s always an easy task. And with limited regulation, it’s not always possible. While it hasn’t always been done perfectly, the fact that we are by far the largest debtor nation, and continue to peddle that soveriegn debt to a willing foreign and domestic market, is evidence of at least limited success.

[SK in CV]

[quote=SD Realtor]
SK as a side note I do not see how the actions of either president, Bush or Obama have done anything to promote a stronger dollar. It appears to me that if anything both of their policies have severely weakened the dollar. Perhaps as you stated the intent of congress is to promote a strong dollar but I am not so sure I believe that.[/quote]

I didn’t say strong dollar. I said stable dollar. And I think it is the one of the functions of the government to attempt to maintain that stability. (I believe it is actually a direct charge of the federal reserve bank.) I don’t think it’s always an easy task. And with limited regulation, it’s not always possible. While it hasn’t always been done perfectly, the fact that we are by far the largest debtor nation, and continue to peddle that soveriegn debt to a willing foreign and domestic market, is evidence of at least limited success.

[Author]

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