On Nov 16th I posted a blog If there is a solution, I think this is it, tell me what you think!
The idea was for the Federal Reserve to borrow at a low rate and lend through their mortgage facilities Fannie and Freddie at a low rate and still make a spread, for people to buy houses. It would be no cost to the tax payer but would get our market going.
To make the critical mass and get everything going, it needs to be across the buying chain and to include jumbo mortgages at a bit higher rate.
My fellow Brokers know that the rates need to go below the last best rate to get buyers willing to take the risk and justify their adventure into the real estate market again and buy a home.
If people buy houses, this will pay off the existing mortgages on the houses and will replenish the banks capital. This would rid us of the toxic mortgages by paying them off.
It would then stop real estate from dropping in price by putting bids back in the market. That would slow down the rate of people going underwater on their equity which stops them from refinancing. It would give the banking system some confidence that they could lend as they have capital available.
Simply speaking, lower mortgage rates are key, but not just someone's opinion that rates are still good but rates below the last cycle good rate. That is human psychology. They need a reason. The fed only needs to accommodate the reason! It will not cost the tax payer a dime! We must have sales chains, of buys and sells linked up the price latter.
Have a nice day!
Richard
View my new homes for sale
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