President Obama is expected to release his homeowner stability initiative soon. This plan is designed to help struggling homeowners who can't make their mortgage payments by giving them affordable refinance options despite their present credit and homes value. It should also help to reduce inventory of foreclosures on the already oversupplied real estate market.
This will be another expensive Government project that will cost all taxpayers for years to come. Right now Obamas plan looks to have $75 billion proposed to curb foreclosures. It is expected to help 5 million homeowners in default as well as an additional 4 million who are struggling.
Many fear that people will literally stop paying their mortgages if they feel the the government will step in, lower the amounts due, and their monthly payment amount.
Experts are especially worried about this problem in areas like California and Arizona where a huge portion of homeowners owe more on their properties than they are currently worth.They also feel that $75 billion would only scratch the service for a foreclosure epidimec that is expected to spread.
From a bill paying homeowners perspective, why should the government give a $50,000 bail out to a neighbor who hasn't been making payments, when they get nothing because they have been responsible? This could be really hard to swallow for those who are bearly making ends meet.
Will the $50 billion in future taxpayer dollars do more good for the health of the overall economy, or will it do more harm?
I think it would do more good than harm, but is it worth $50 billion? And if this bill is to pass, the government really needs to be careful to make sure it has some strict guidelines to prevent deadbeats and free loaders from abusing a program designed to help others.
Alan Barker
Cornerstone Real Estate
From a bill paying homeowners perspective, why should the government give a $70,000 bail out to a neighbor who hasn't been making payments, when they get nothing because they have been responsible? This could be really hard to swallow for those who are bearly making ends meet.
The alternative is for the neighbor to lose his house and have it sold for $100,000 less in a foreclosure and then the person who was paying his payments dilligently can be upside down in his house also and find his neighbors house is the best comparable on his. There are no easy solutions, but there is a common thread in all of this which is every action or inaction has it's cost.
Great point Michael.
Amen to that. Now if we can do something to educate our fellow Realtors. I am always embarrassed when I hear another Realtor say something like "They deserve what they get. They should have never borrowed the money to purchase a home if they couldn't afford it". I am sure that every Real Estate Agent has sold a home to a family, made possible only by the use of a so called "$0 down or Subprime Loan Product" now referred to as a "Toxic Asset". I am also sure that the cost of gas tripling and extensive layoffs were never part of the borrowers budget either. Without loan products designed to help the average American working class family get into a home, we may see future home sales drop like a rock and many in the Real Estate business may find them self in the same boat, so get ready!