7 Ways for Obama to Save the Housing Market

Housing, Credit and Economy Woes?

Beleive it or not for some who don't beleive, these three items are indeed all wrapped up together. Banks started giving out mortgages and getting involved with real estate sales, things they should have left to the pros, then many mortgage companies began giving mortgages to people they knew could not afford them just to make that mighty closing buck, and the people who took those mortgages knowing they could not pay, are all too blame.

Then of course let us not forget the credit card companies. Raising interest rates off the chart, charging outlandish fees for over charges, then when people are trying to get away from them they offer pre approvals for more and more. Now if you all for help with one of your card companies you are given people in India, the Phillipines, or some other country instead of America. When the credit card companies began hurting months ago it was the Americans who lost their jobs. We recently found out that one of the big companies, Chase also runs the nations EBT system for food stamps! So whos playing who? Now Chase and Citi are hollering bail me out just like AIG and the like, while the American people who are midddle and lower incomes get stomped on again and again.

Homeowners who can actually make their payments and are trying are the ones who need the help, not the ones who just decide they are not paying the house payment to go on vacation or buy a new car, or gamble. It is unfair though that the government is now making an effort to help those who are losing their homes now, when thousands should have been helped at the beginning of this crisis. There should be some relief for those who have already been victims of foreclosure.

Housing prices have climbed to high, interest is too high, and the market is dying. The truth is we have all been living way beyond our means and this crisis is bringing many back to reality.

Downsizing to a smaller more affordable home, cars, etc, is the best solution for thousands of Americans. Bringing all our jobs back to the USA is another, and then the government needs to help the people of America instead of pouring good money after bad into those companies on Wall Street.

CWorrilow of TN @ Nov 28, 2008 22:37:32 PM

Let the home prices come down

Dave of NY said it best: "Let the prices come down to where they should be, and start living within the confines of the free market. All of these plans putting a floor under prices with borrowed money are laughable. The market will bleed for longer because prices are TOO HIGH. It's as simple as supply and demand, something our elected officials will never fully understand."

I still find it hard to believe the our govt officials are trying to set a floor on home prices like this. The pain will happen sooner or later. Better to be done quickly. Just like any other price control policy we have tried this one is doomed to failure as well.

Eric B of MI @ Nov 20, 2008 17:40:53 PM

What about those who did the right thing?

What about those who realized prices were too high and only going higer so did not want to engulf themselves in huge amounts of debt they knew they couldnt pay back? They sat on the sidelines waiting for prices to come down and rented within their means. They saved money every month and did not contribute to this whole big cluster. Nobody is talking about rewarding these individuals for making the right decisions. A few tax credits here and there but nothing rewarding for doing the right thing. I acknowledge we need to "stop the bleeding" and get back on the right track but lets not forget the people who did it right and made wise, thoughtful, and correct decisions.

James A of CA @ Nov 18, 2008 17:57:16 PM

My Plan

I can't understand why no one has come up with the plan which I am going to outline below (economists feel free to plagiarize)

1. Enable people to refinance their mortgages into 40 or 50 year terms thus lowering the monthly payments.

2. Make these loans assumable that is if the owner can't pay someone else can come in and pay for the property under the same terms as the original owner. The original owner would lose any accrued equity at that point. No one would gain from a rise in equity in these homes unless all government or private refinancing aid has been paid back (even if the mortgage had been assumed by someone else.

3. Tack a fee onto these loans that would be used to administer the plan.(the fee would be a percentage of the property's value)

My plan saves the housing market by reducing foreclosures, keeping people from losing their homes, making homes more affordable, reducing costs to the tax payers and eliminating moral hazard by eliminating the possibility of gain by people aided by any government help. These new loans could be both under Fannie Mae/Freddie Mac and private banks. The investors holding securities on these properties would also be paid back (just under a longer time frame) since the mortgage is assumable and no matter how long it took the government or investor would eventually be paid back. These securities might even become an ultra safe long term investment.

Lisa Porter of CA @ Nov 17, 2008 22:05:26 PM

Housing Slump

A way to help the slumping housing market

There are two major issues today that are troubling the housing market. Although related they are not the same. One is keeping people in their homes and out of foreclosure. The other is stimulating the market to use up the large inventory of unsold real estate. I would like to address the later.

FHA was designed to allow people in a position of financial weakness to compete in a robust housing market. The U.S. Government insures loans that have low down-payments; borrowers can have higher debt-to-income ratios and pay less mortgage insurance. Borrowers are required however, to be owner occupants with their financing only used for their primary residences. Today, with the government’s take-over of Fannie Mae and Freddie Mac, and all non-government alternative sources of home financing gone, the market is left with only those purchasers who qualify for either a loan made by the government though Fannie Mae or Freddie Mac, or one guaranteed by the government through FHA. The current real estate market however, demands buyers with strong financials, to be able to withstand downturns in values, and those able to offset losses with large cash reserves. Not exactly a match.

The solution may be to allow well-qualified borrowers, to be investor owned buyers, using the same FHA insured financing now only offered to owner occupant borrowers. Let’s allow the people who have the money gamble on finding the bottom of the housing market. Let them make the potential appreciation if they are right, or let them lose if they are wrong. At least they will not add to the current default rate until the markets correct themselves. We can create a tax incentive program for today’s buyer to enter into a lease with option to purchase model, so the tenant will become the purchaser in the future. This way the homes will end up being owner occupied in the long run, but occur in a time when the crisis has passed. FHA already permits an assumption of the loan, which would help the transfer of ownership, to the future owner occupant. Once the market rebounds, the program can be re-evaluated as to continue or not. For now, it’s really a simple marketing strategy, “market to those that can afford to buy”.

Richard Dubnoff

Mountain Lakes New Jersey

Richard Dubnoff of NJ @ Nov 17, 2008 15:48:50 PM

capital commerce

Please publish this blog (expanded) as a cover article.

Housing got us into this mess, resolving housing might be the first step in getting us out.

Housing has fallen sufficiently. A 30% decline on $400,000 is $280,000. $280,000 going to $400,000 is a 43% increase. The gains have been wiped out. In many regions, housing is falling below where it began when the housing market first took off. Falling another 20% will cause more havoc. Pick all or any combination of the 7 but stop the bleeding before we fall into a depression.

Mark of WA @ Nov 16, 2008 23:16:20 PM

Economy

The reason we are in deep dodo is because we allow other countries to import crap into this country (from third world countries) thus making us non-competitive pricewise and our factorys close. This is NOT free trade. If a country charges us 300% IMPORT DUTIES, then we should charge them 300%. This country will never compete with 2 dollar a day wages and we will eventually have no manufacturing jobs left here!! Call Microsoft up and you get foreigners!!! This government needs to wake the hell up and quit letting these cheap imports into this country. And, CEO's try to save money by outsourcing to other countries!!! No jobs, no money, no houses. Simple.

Thomas Saccuci of CA @ Nov 16, 2008 07:41:10 AM

Let them get foreclosed on.

According to the Schiller index housing prices would have to come down another 20% nationwide to bring them in line with actual incomes. The fact is that housing values climbed too fast. We are in a needed correction to make housing more affordable. Unfortunately this will catch some people in a bad situation. But when you buy a house that you can't afford, don't put any money down, and then because of bad credit get a subprime ARM, then who is really to blame? As a real estate appaiser I saw people use their homes as ATM machines for years. They were foolish. I have no sympathy and no desire to bail those people out. It's their own fault.

Doug of WI @ Nov 15, 2008 23:42:30 PM