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5 Reasons Housing Stocks Are Still in Trouble

I agree helping 9 million stay in their homes does nothing for the 2.5 million homes currently REO by financial institutions. (and more to come)

Removing 2 million homes from the MLS for Sale market will help everyone including the homeowner currently upsidedown, the homeowner in foreclosure can now sell into a rising market. (The law of Supply/Demand will increase prices as potential buyers will frenzie to buy a home at discount). The fear of not getting in will drive the market back to a more sustainable level/Price.

The Gov thru an RTC should purchase these homes & send the home to the local HUD agencies for rentals & ultimate disposition thru MLS sales.
The RTC could sell 600 billion in long term (30 year) bonds to finance 2 million homes @ 300,000 (app) each. Price could be set at 20% less than the first mortgage. No jumbos, They work themselves out.

When the homes are eventually sold (as the need for housing increases the HUD could place inventory for sale). Prices will be set @ the original first mortgage (collect the 20% discount from purchase).

Any losses after all homes are sold (5-10 years) will be absorbed by the
institutions selling homes to the RTC in proportion to the amount purchased and sold by the individual institutions. This loss will be paid to the bondholders over the remaining years of the bonds. (more easily digested).

Any comments?