John Wake

New Government Policy: Tax Credit as Mortgage Down Payment

You're getting carried away.

1) The median home price in Phoenix has fallen 51% from the peak. If you bought around the peak, it doesn't matter if you put 0, 3.5 or 20 percent down, you have a large incentive to default.

2) Money is cheap but hard - the interest rate is great but it's hard to qualify for a loan. The people getting these loans are more qualified than many who got loans during the boom. For example, today there are no no-doc loans and people are not being qualified using the 1 year teaser rate.

Yeah, people who put 0 percent down will default at a higher rate than those who put some money down but that default rate is not going to be in the same ballpark as the default rates we've seen since the peak.

In addition, the median home price may be bottoming out in some areas of Phoenix. Since falling prices were the greatest generator of defaults, it seems to me that you are exaggerating the default rates on these loans that receive the $8,000 tax credit, in metro Phoenix anyway.

New Horses for the Foreclosure Merry-Go-Round Won't Make It Spin Faster

Whoops! I kept getting a message that said my password failed when I tried to submit the comment and then when I logged-in correctly I guess it submitted ALL the previously failed submissions! I wish I could delete the extra posts. Sorry about that.

New Horses for the Foreclosure Merry-Go-Round Won't Make It Spin Faster

If they put the former homeowner or tenant into a 6 or 12 month lease, that would lower the supply of homes and help ameliorate the over-correction we are seeing in some areas.

To put it on the market right away as a leased property will only further lower property values. Leased properties usually sell for less than properties without leases. Owner occupants don't usually buy leased properties so by putting these properties into month to month leases, they largely cut out the largest, most attractive segment of home buyers. In addition, leased properties tend to sell for less because it's usually hard for real estate agents to coordinated with the tenant to show the property (why go to the trouble? there are zillions of other homes for sale), the condition of the property is usually messy, and the uncertainly you mentioned about the risk of not being able to move in immediately after closing.

So by adding a month to month tenant they are LOWERING the value of the property in most cases. (In a tough neighborhood, however, where vacant properties are usually looted, a month to month tenant would be a good idea.)

New Horses for the Foreclosure Merry-Go-Round Won't Make It Spin Faster

If they put the former homeowner or tenant into a 6 or 12 month lease, that would lower the supply of homes and help ameliorate the over-correction we are seeing in some areas.

To put it on the market right away as a leased property will only further lower property values. Leased properties usually sell for less than properties without leases. Owner occupants don't usually buy leased properties so by putting these properties into month to month leases, they largely cut out the largest, most attractive segment of home buyers. In addition, leased properties tend to sell for less because it's usually hard for real estate agents to coordinated with the tenant to show the property (why go to the trouble? there are zillions of other homes for sale), the condition of the property is usually messy, and the uncertainly you mentioned about the risk of not being able to move in immediately after closing.

So by adding a month to month tenant they are LOWERING the value of the property in most cases. (In a tough neighborhood, however, where vacant properties are usually looted, a month to month tenant would be a good idea.)

New Horses for the Foreclosure Merry-Go-Round Won't Make It Spin Faster

If they put the former homeowner or tenant into a 6 or 12 month lease, that would lower the supply of homes and help ameliorate the over-correction we are seeing in some areas.

To put it on the market right away as a leased property will only further lower property values. Leased properties usually sell for less than properties without leases. Owner occupants don't usually buy leased properties so by putting these properties into month to month leases, they largely cut out the largest, most attractive segment of home buyers. In addition, leased properties tend to sell for less because it's usually hard for real estate agents to coordinated with the tenant to show the property (why go to the trouble? there are zillions of other homes for sale), the condition of the property is usually messy, and the uncertainly you mentioned about the risk of not being able to move in immediately after closing.

So by adding a month to month tenant they are LOWERING the value of the property in most cases. (In a tough neighborhood, however, where vacant properties are usually looted, a month to month tenant would be a good idea.)

New Horses for the Foreclosure Merry-Go-Round Won't Make It Spin Faster

If they put the former homeowner or tenant into a 6 or 12 month lease, that would lower the supply of homes and help ameliorate the over-correction we are seeing in some areas.

To put it on the market right away as a leased property will only further lower property values. Leased properties usually sell for less than properties without leases. Owner occupants don't usually buy leased properties so by putting these properties into month to month leases, they largely cut out the largest, most attractive segment of home buyers. In addition, leased properties tend to sell for less because it's usually hard for real estate agents to coordinated with the tenant to show the property (why go to the trouble? there are zillions of other homes for sale), the condition of the property is usually messy, and the uncertainly you mentioned about the risk of not being able to move in immediately after closing.

So by adding a month to month tenant they are LOWERING the value of the property in most cases. (In a tough neighborhood, however, where vacant properties are usually looted, a month to month tenant would be a good idea.)

Two Mortgage Markets Emerging from the Crisis

As soon as home prices stop falling, mortgage money will magically appear.

A possible problem with government efforts to support the real estate market is that their efforts may only delay the bottom and prolong the pain.