joethelender

Hottest Potato in Washington: The Homeowner Bailout Plan

It is a chain reaction we have seen recently in the market collapse. The unfortunate blind eye that our government took these last few years has compounded into the current financial crisis. These non-elected experts that run the federal reserve and other top jobs responsible for regulating the banking industry are sure to please their wealthy Wall-streeters that have disappeared into the night with billions. The new leaders will need to create a sound strategy to dig the world out of this worldwide mess. It is not a simple solution. People today are still getting into homes with no money down. Investors are still flipping homes for huge profits. FHA has not really changed guidelines for primary borrowers. The real problem is the result of investors and homebuilders being allowed to get appraisers to overvalue the homes. Appraisers continued to increase the value of a home because the interest rates were so low making the payment for higher prices affordable. The appraisal industry and the realtors have slowly corrupted the industry for years without penalty. The appraisers did not have to worry about anything, there incomes were about $300 per appraisal, five in a day, no problem! $30k a month, sounds reasonable compared to builders take and realtors commission. The banks rely on honest appraisers and realtors to guide new homebuyers and that did not happen.The mortgage companies have also taken profit from this subprime market allowed by Fannie and Freddie. That is now gone. 300 mortgage companies are now gone in less than 2 yrs. The banks have learned what? That the government will bail them out if needed. Nothing will change that. Homeowner bailout, not good for the economy. Why? The economy needs to improve on people going to work, manufacturing goods and services and spending more money. So lowering your payment doesnt help the economy, its a drag on the economy. The government could help people get work, create jobs and increase the minimum wage to a liveable wage. The retail jobs and low level jobs are unfortunately becoming the majority in this country, the tech jobs are going overseas. A 10% increase in employee wages across the board each year for the next three years should be required to help get people motivated to work. 30% increase in three years is better than we have seen in 30 years. It is better than a $500 stimulus check. People on welfare would consider working instead of sponging. Lets create this bill! Pass it on! It is fair, and tax breaks for all business would be possible since the money is coming from the employers, not the government. More tax revenue would be generated.

Proposed Homeowner Bailout Plans are Loaded With Problems

While all of these ideas are interesting, there is no way you can have a blanket policy for the country to bail out homeowners. The banks are not at fault for the foreclosures, the economy is. Income has been going down in comparison to cost of housing. Now that the bubble has burst the government should have created by now an emergency insurance fund, like FEMA to help people that qualify. Maybe now is the time to start. Texas has not been hard hit by this crisis, and several other places that have sound lending practices. Not paying your house payment because the value has gone down is a bad idea, giving it back to the real owner (the bank) is. The banks going to auction it off or sell it on the open market to the highest approved bidder. The person that chooses to hurt their credit is not going to get a good home loan. This idea of letting people buyback their own home after they walked away from the loan is not going to happen unless they pay cash. Everyone would jump on that bandwagon and make the problem 100 times worse. Lets come up with some more ideas that make sense.