Well it’s 2010, and the New York Times has a piece worth a read about the current 2010 version of The Housing Crises.
“The financial crisis and Great Recession have their roots in the housing bust. When it comes, a lasting recovery will be evident in a housing rebound. Unfortunately, housing appears to be weakening anew.
The situation, we fear, will only get worse in months to come. Rates already are starting to rise as lenders brace for the Fed to curtail support for mortgage lending as early as the end of March. The home buyer’s tax credit is scheduled to expire at the end of April. And a new flood of foreclosed homes is ready to hit the market.”
The solution, according the Times, is “principal reductions”:
“The best way to modify an underwater loan is to reduce the principal balance, lowering the monthly payment and restoring equity. But for the most part, lenders have refused to reduce principal because it would force them to take an immediate loss on the loan. Lenders also have vehemently — and successfully — resisted Congressional efforts to change the law so that bankruptcy courts could reduce the mortgage balances for bankrupt borrowers.
To avert the worst, the White House should alter its loan-modification effort to emphasize principal reduction.”
That sounds good on paper, but how about those who paid cash for their home, or those who prudently bought less home then they could afford and are not living as “large” as their neighbors? Where is their “bailout”?
I believe the thinking of many Ocean City Maryland property owners is similar to those of Diana Olick at CNBC, who wrote today:
“I would honestly rather see my home’s value go down than see the guy next door … who made a poor/negligent financial decision get a mulligan at my expense.”
The full articles–
