With the Foreclosure rate set to zoom higher and the Obama housing plans flopping, this new plan may help more people refinance.


http://www.bloomberg.com/apps/news?pid=20601087&sid=al5p85mlike0

More addressing the problem by letting more people who can't afford the houses they bought to keep them. Housing demand is the answer that lifts all boats, not throwing money at the people who contributed to the problem.

I'll repeat my proposal: drop the "first time homebuyer" restriction (which isn't even true, since you only had to not own a primary residence for a few years) for the $8k credit and allow ANY buyer who agrees to buy and keep a house as a non-rental for five years to do so. That prevents flipping, gets houses bought and off the market, and gets local real estate tax revenue flowing again. Let's cut the crap already.

How stupid can you get.

You have people that borrowed irresponsibly, now you want them to borrow more...

There is discussion of making the credit available for *all* and raising it to $15k. It already has to be for a primary residence, so many speculators and flippers won't be eligible. I believe the original plan split the credit over two years, which had a planned effect simlilar to what you propose. But that's been scrapped in favor of upfront credit toward closing costs and down payment.

If demand is the key as you say, remember the the complement to Demand is Supply in determining market prices. Helping people afford thier homes, and not walk away if they're under water, reduces supply. It also prevents foreclosures that lower the assessed values of all nearby homes, thus reducing real estate tax revenues across an entire neighborhood. Banks still pay the taxes on foreclosed properties.

I agree it sucks bailing out those who should never have bought a particular house, but we have to stop the freefall. The buyers credits stoke demand, the refi's and mod's choke supply. We need both to put a floor under this thing.

WHat kills me is the recent spike in new construction starts.

ITRADE Wrote:
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> How stupid can you get.
>
> You have people that borrowed irresponsibly, now
> you want them to borrow more...


They won't borrow more in a refi, just lock in a lower, fixed interest rate for a lower monthly payment. In the case of modifications, the amount borrowed will actually be reduced.

Bounce House Wrote:
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> If demand is the key as you say, remember the the
> complement to Demand is Supply in determining
> market prices. Helping people afford thier homes,
> and not walk away if they're under water, reduces
> supply.

The above is why I said demand lifts all boats... with higher demand comes higher prices. Higher prices means existing homes are worth more, and the people who cannot refinance because they are underwater can then do so because the value of the house has lifted to meet or exceed the loan amount and they then qualify for refinancing.

OK I hear what you're saying. Not saying you're wrong, but one could apply the same logic and say "supply lifts all boats... with lower supply comes higher prices. Higher prices means existing homes are worth more, and the people who cannot refinance because they are underwater can then do so ..."

Either approach amounts to the government shelling out cash, so why not attack both supply and demand to really grab this bull by the nuts?

Moving from Macro to Micro economics, all I'm sayin' is you can be philosophical or you can refi and save yourself some money. I got mine, and I encourage all who are eligible to look into getting thiers.

Because shelling out cash for demand is helping people who can afford houses and can almost afford them. It's my opinion only, but that is fairer in my view and a more productive use of public money than trying to throw good money at bad borrowers. Plus there is plenty of "shadow demand" out there, houses that are not on the market because banks don't want to expand inventory and make things even harder to unload. If demand incentives with teeth are out there, it will stimulate purchases.

Just like a few years ago when the auto companies had "employee pricing" incentives. They blew sales out of the water because there were incentives in place to greatly increase demand.

The powers that be cannot lower supply... that is a hopeful outcome or effect of what they CAN do, which is spur demand.



Edited 1 time(s). Last edit at 06/19/2009 02:33PM by pgens.

Bounce House Wrote:
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> There is discussion of making the credit available
> for *all* and raising it to $15k.

A piece on this proposal...

http://www.cnbc.com/id/31448492