There are a lot of things being proposed and being done by our government to help people who can't afford to live in their homes. Government puts pressure on banks to modify loans. HUD loans unemployed people up to $50,000 if they are at least three months behind in their payments. There are government cash incentives to banks and homeowners to complete short sales.
Although the assumption is that these are humanitarian acts, they have an underlying common but misguided purpose which is to help the housing industry. That is a worthy endeavor because a healthy housing industry is a precursor to a healthy national economy. Problem is that the government spending of our tax dollars for charitable purposes does little or nothing to improve the housing market.
The housing market could use some help, both from lenders and from government. In addition to loaning money to unemployed homeowners who are behind in their payments, why not lend money to people who are making their payments, but, because values have dropped so severely, are not able to sell and move up to another home? There could be stipulations that the loan is subject to the owner buying another owner occupied home, and that it be used for paying the cost of retiring the mortgage loan on their sold home.
Our market is going almost nowhere because almost all purchases are by first time buyers and investors, in many situations buying vacant foreclosures. There is nothing wrong with that, except it is not enough activity to sustain a vibrant, robust housing market. We need more owner occupants buying homes from other owner occupants, buying homes from other owner occupants etc.
By helping people who are in a position to make a higher home payment, the industry and the economy could be on its way to a reasonably rapid recovery.
Comments (6)Subscribe to CommentsComment