Monday, September 6, 2010

A Question about Housing Market Rescue

As I read another article about the housing market (this time that some people say it should collapse), I wonder this: why are all the solutions so blasted uncreative? For example, an 8k tax credit was NEVER going to do more than encourage people to buy sooner rather than later (as opposed to inducing buyers to buy rather than rent).

What I wonder is what would happen if the government (who theoretically controls a huge portion of the market anyway because of bailouts to banks, aid to Fannie/Freddie) just said that anyone who:

-Was losing their home because they lost their job and cannot pay (but otherwise could)
-Was able to prove that they had been defrauded by mortgage companies

just would receive a temporary moratorium on home payments until they either got a job or got their payments reduced to a level they could afford.

The reason I say this is because I think that we have yet to see our government actually flex its muscles in this crisis. We could actually save the economy, I believe, if we just decided that it would be some mortgage brokers or banks that were going to lose rather than homeowners. The problem is that a lot of "fake" money has been created and it needs to disappear in order for the market to go back to "normal." Why can't we let that fake money come from a few banks? Why can't we modify payment terms for people who are losing their home because they lost a job due to this bad economy? I am actually interested in answers to these questions.


  1. This comment has been removed by the author.

  2. Sorry, I was sleepy when I commented and made a mess of the grammar and syntax so I deleted it rather than trying to clean it up. Now that I'm awake I think I can get the point across a bit more clearly.

    The point is this. When a bank forecloses on a home and retakes possession for some dingbat reason {I suspect they bought an exemption in legislation} they are not, for some reason< considered to "own" the home and don't pay any property taxes on it.

    I feel that if banks actually had to pay property taxes on foreclosed homes we wouldn't be seeing vast numbers of such homes being left to sit empty and rot from lack of maintenance.

    As it stands now, the banks don't really have any disincentives to sit foreclosing on families who are behind in payments. Putting them on a level playing field in this regard with ordinary citizens might go some way towards giving them one.

    It would also lessen the enormous drop in tax revenue that towns have seen since the real estate meltdown.

  3. That is fascinating. It always is so interesting to see corruption built into our system. I figure you are probably right. If a bank of was losing thousands on each home they would probably be much more likely to work with people to get their mortgage fixed. As it is now, there are few incentives for them to turn over homes quickly.

  4. LOL! Wait till you see how a parcel of land costing a few thousand dollars tops gets to cost a quarter of a million dollars a few years later after the environmental impact statements and challenges thereto are finished and all the authorities get finished charging "fees" to cover their operating budgets.

    Derrick, you've got yourself into a profession that is going to cause you a lot of disquiet and make you WAY cynical before your time. :-(

  5. Its not actually all that bad. I really like doing this work. It can be very rewarding as well as frustrating. There are problems (and they are never simple), but there is always hope for resolution.