A Government Plan to Reduce Foreclosures 75%?

Advertising

It is a rough start to what was promised as a new era, a time of change and a promising future. The Obama administration has made tremendous efforts at stimulating the economy with bailouts and a flood of ideas and taxpayer money poured into solving problems, particularly the escalating home foreclosures.

Now there is a new conceptual program that would allow homeowners facing foreclosure to remain in their homes. This is not an idea to make the home more affordable to own. Simply, the owners can stay put but become tenants, renting the home they once called their own.

The plan would allow borrowers who fall behind on the mortgage payments to avoid eviction by renting the same home. They would give up all of their equity and future claims on the program in exchange for getting to stay in the home. Of course the lending institution becomes the owner, a landlord, and a property manager, all at the same time.

How brilliant! I can see the headlines now: Foreclosures Cut 75% – Obama rescues troubled Homeowners – Obama Cures Foreclosure Problem. Perhaps the real benefit of such a program will be the banks. Banks, now showing these homes as non-paying liability, would be able to show them as a paying asset. Plus, tens of thousands of troubled homeowners would now be assured of voting for Obama?s re-election so they can insure their handout-living continues. Depending on how the plan works, the government would establish a rental Czar and thousands of government jobs in the new government rental management program. A real win-win situation for everyone . . . except for the taxpayers.

It was also reported that officials are creating a ?housing stipend? added to unemployment benefits of homeowners. The hope is that by paying this additional money to the un-employed, it would lessen the chance for additional foreclosures. What about additional money for existing renters? This could be considered discrimination against those renters.

In my opinion, what needs to happen, what must happen, is the flushing of bad debts once and for all, massive bank losses, and a return to reasonable living and lending. Handing out ever more exotic loans on ever expanding time horizons is a bad choice, whether or not it will work.

If you try and rig the market to give benefits to people who don?t pay their mortgage… don?t be shocked when less people stop paying their mortgage. When you change the rules in the middle of the game… don?t be shocked that the prudent people get angry.

Another way to look at this plan is it basically makes government REITs. This new deadbeat homeowner rental program could be known as: Shared Homeowners Assistance Management; SHAM for short.

Is this the perfect country, or the perfect storm? The government now controls car companies and banks. It won?t be long until they are in control of health care and energy/utilities. It seems they are anxious to take control of rental housing and whatever else they want. Your costs will go up, of course, but that?s just re-distributing your wealth. Is this the hope & change you expected?

Read more of Bob Schwartz’s ‘tell it like it is’ real estate opinions & subscribe to his free RSS feed at: San Diego real estate market blog. Also visit San Diego real estate agent & San Diego real estate agents

Related Blogs

  • Related Blogs on estate :
  • Related Blogs on foreclosures :
  • Related Blogs on government :
  • Related Blogs on home :
    • Related Blogs on housing :
    • Related Blogs on market :
      • Related Blogs on real :

      Tags: , , , , , ,

      Leave a Reply