Tomorrow--fingers crossed--should be a momentous day for real estate as President Obama unveils the specifics of a $50 billion plan of reforms and relief for housing in America. Hopefully, the "specifics" of the housing relief will truly provide relief to the more than 2 million Americans who are now or will soon be facing foreclosure.
Although facts are few and sketchy, it's likely that Obama will concentrate on loan modifications that will bring payments to between 30-40 percent of the homeowners income; subsidies intended to make troubled loans more palatable to lenders; and increases in FHA limits and government programs to make home purchases in higher-priced regions (such as California) more accessible to a wider number of homeowners looking to refinance their current loan.
Two issues that have been discussed by those "in the know" have been the possibility that Judges presiding in Federal Bankruptcy Court may be given jurisdiction over modifications--a move that has been discouraged by lenders and the financial community, but seems to be an inevitability; and that future housing relief plans may involve the reduction of the loan principle through a cooperative write-down by the lender and subsidy by the government. Both issues are controversial and, in the opinion of many, may simply artificially reset the housing "thermostat" to a lower price only to have it increase again without firmly placed fundamentals necessary to sustain the growth. There is also the real possibility that financial relief can be so attractive as to encourage even those who are not in need to seek assistance and loan modifications--again, a move that will artificially drop or reset housing prices. Although many believe that this second scenario is less likely, it seems fairly predictable that government assistance--when made available--is too attractive a thing for most to pass up.
The housing plan will be unveiled tomorrow, and I'm fervently hoping for the very best for all of us. Keep your fingers crossed!!
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