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Let's make this easy, the governement should gurantee 4.5% home loans, no smoke and mirrors

By
Real Estate Broker/Owner with John L. Scott Real Estate

This whole discussion of "the Bail Out" is very frustrating. Not only do most people not understand it but it is so convoluted that it may never get done? How much will it really cost? Who does it benefit? Will it really help the family who is in hardship?.....all are questions being asked, not answered.

I'm a pretty simple guy...which leads to pretty simple solutions. I get supply and demand...I get the family who purchased a house a few years ago who bought into an ARM product and now can not afford the increased payments. I get most people thought the housing market would go on forever.....

Though I'm typically not in favor of government involvement here is where I think they can help. (I understand the "they" is really "us")

Provide a fixed rate 4.5%, 30 year home loan program. The borrower does have to qualify for it. Allow some leniency for those that are in an ARM situation, give priority to those that are in danger of loosing their homes. Also provide a 5.5% loan for investors who want to buy properties in the county that they live and a 6.5% loan to investors who want to buy homes in areas they do not live.

This will accomplish:

1) Allowing people to stay in their homes, now they can afford the payment.

2) Encourage buyers who have been on the side lines to jump in.

3) Encourage investors to invest in their communities.

4) Reduce inventory which will allow home values to stabilize.

5) Provide banks some stability because they are not getting as many houses back or having to write off bad debt.

Simple, most of us can understand it, we can see who the beneficiaries are.

Are there other issues at hand...certainly, but this is a program that could be easily put into place and would begin to have an effect in weeks and months not years.