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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?

Homes Under Water: Looks Like a Long Slog for Homebuilders

Housing solution!

I, Remove 2 million homes from the MLS (for Sale) that financial institutions currently have
for Sale. Any Institution that received TARP funds will be required to first offer the home
to the RTC for purchase. RTC will not purchase any home above $417,000. No Jumbos.

2, Government Resolution Trust will purchase these homes from these institutions for 20%
less than original first Mortgage amount. No negotiating.

3, 600 billion dollars to buy these homes (app $300,000 each average) will come from the sale
of long term 30 year bonds. (Currently app 3-5%) issued by Government.

4. RTC will send these homes to the local HUD offices for disposition thru voucher program
(rentals). $5000 will accompany each home for repairs & upkeep. eventually as the MLS
system reaches certain inventory levels (i.e. 30-60 days) HUD will be allowed to place these
homes on the sale market. If the inventory increases HUD will remove homes accordingly.
This will be a local HUD market decision, differing from region to region. Rental Income will
help cover expenses such as maintenance, insurance and property taxes.


Pro's:


Supply/demand economics will create a bottom in the housing market once 2 million homes
for sale are removed. Prices will start to increase.

Local governments will see a bottom in declining values and revenue will increase as values
slowly stabilize and slowly increase.

Individual homeowners as well as other sellers will find a housing market ready and able
to absorb the inventory.

Banks will now have a fresh source of funds to lend on homes that are not declining in value.

Banks will be able to clean balance sheets of hard to liquidate assets.

Lending/leverage/credi... markets will slowly begin to return to normal. Applications will
increase, appraisals, home inspections, title work, all types of stimulating activity for business.

As home prices stabilize and increase the local HUD agency selling homes over a 3-7 year time
frame will see prices rise for properties purchased by the RTC. HUD will only be required to
return to RTC the original amount of the purchase price plus the 20%. Or the original amount of the
selling banks first mortgage.

Once the RTC is closed and all homes sold, all losses (if any) will be covered proportionately
by the selling institutions. All financial Institutions selling homes to the RTC will share the loss
at the RTC as a percentage of total homes purchased and homes sold to the RTC. That percentage
will be the Banks percentage for covered losses. These losses will be paid by the banks over a 30 year period liquidating the original bonds sold to finance the purchase.

Other agenda items:

Mark to Market accounting will only apply to non performing assets.

Spend 50 billion each year for the next 3 years rebuilding infrastructure. Bridges, Roads, tunnels,
water plants, dams, levies anything to create jobs.
Stimulus checks for $300 only help pay a credit card bill once.

Any comments?