Ruth Lee
Ah…they are at it again. The Treasury Department is cooking up a doozy of a plan for those that can capitalize on the devastating loss of their fellow citizens who have lost their home to foreclosure. The notion is that if you lower rates to historical lows (like 4-4.5%) first time homebuyers will snap up the volume of homes in inventory left by foreclosures and this will cause housing values to magically rebound. At a modest price tag of $25b a year for the taxpayer, what are the potential effects of this plan:
THE LOSERS:
1. Current homeowners: It does NOTHING to address the reason so many homes are on the market… foreclosures, their contingent loss to investors, the effect it has on the local market or the families that have lost everything they have. And if you are in a bad loan, one that could be modified with some thoughtful approach, too bad… they will just make it easy for the next guy to buy your American dream on the cheap!
2. The economy: OBJECT LESSON: Nothing can quite destroy an economy like overly cheap credit and pressure on banks to extend it. Wait – that would mean learning from our mistakes, which is too much to ask.
3. Future homeowners: What happens when these first time homebuyers…often at the lower end of the economic scale… are the first to be fired in a constricting employment market? I know this was planned with the notion that FHA (read taxpayer) would be insuring most of these loans… so we get two losers…the future homeowner AND the taxpayer. Now that sounds about wrong.
Did we really hire these guys? Seriously, is it that they wake up in the morning and think some cooky taxpayer funded/borrowed plan to not address the issue will be THE ONE, the NEO of our economic matrix? How about comprehensive strategy… you know what the real business people out here have to do because we know that Congress isn’t our lobbyist’s call away for our bailout? I would rather that we employed a single mom of three kids that knows what a budget means and how to creatively figure out how to get out of a mess…at least we would get something real.
Read more here: “Treasury’s Plan for Mortgage Rates Could Be Costly”