I have been writing to everyone from my governor to the President about aid to housing as a major component of any stimulus plan. While I opposed the first stimulus plan, and am disgusted at all the ridiculous things that seem to get tucked away in them, I feel like we are at a point in the economy that without one, things are going to get terribly worse.
We need jobs. We need people to be able to stay in their homes. We need tax relief!
My theory is this: There are already too many foreclosures on the market, which is driving down home prices. If nothing is done to help keep people in their homes now, more people will be unable to keep their homes, adding more foreclosures to an already saturated housing market. Then, when your neighbor, who put 20% down on the home they bought four years ago gets transferred and needs to sell...guess what? The value of their home has come down so much they not only can't sell for what they bought it for, they can't sell it for even the equity they had when they put 20% down. So they are in a short-sale situation, the bank won't work with them, or they can't sell before it starts to hurt them after they've transferred...and now they decide to just give the deed in lieu of foreclosure. Add another foreclosure to the market, and the cycle repeats itself.
This is reality. This has happened to clients of mine, and will continue to happen unless we can work with those who are struggling to make their payments due to job loss or income reduction, coupled with their homes being worth less than they owe on them. If they want to keep their homes and are able to with a reduced monthly payment, why not lower their interest rate, or extend their loan term, or give them a forebearance period? I understand that's not the agreement that was entered into, but if the government thinks it's okay to hand out billions to the banks, well then those banks better darn-well be doing something constructive with all that money!
So...what are your thoughts?
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