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Federal Housing Recovery Attempts to Mask the True Health of the Market

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By : Paul Escobedo    99 or more times read
No one can say that the federal government has not tried to find that silver bullet when it comes to their response to the housing market crisis. The government has spent the last half decade turning out one federally sponsored program after another. While some have worked better than others, there are still gaps in many of the programs that reduce their overall effectiveness.

To date there has been an estimated 15 or more federal programs that have been deployed in efforts to slow the rapid decline in the housing market. Many housing market analysts have concluded that the constant barrage of assistance programs is doing nothing more than dragging out the inevitable. Economists agree that the natural ebb and flow of the market must be allowed to consume the mass of defaulting loans before any gains within the market become permanent.

The problem that many people seem to have with the myriad of federal assistance programs seems to be not with the individual programs, but in the role that the federal government is playing in the "private sector". There are also, the unheralded costs that tax payers have incurred to support these programs.

Federally sponsored housing assistance programs are nothing new. The Bush Administration announced the creation of Hope Now Alliance in 2007. Since that time there have been an innumerable amount of federally backed programs designed to assist, recover, and stave off impending disaster within the financial markets. Some of those programs included the revised Hope Now Program, Hope for Homeowners, HAMP (Home Affordable Modification Program), and First Time Home Buyers Tax Credit Incentive Program.

These programs are just the tip of the iceberg when it comes to the government intervening in the housing market. There are the several mandates and initiatives that the federal government has initiated in efforts to hold up the failing housing market. There was the costly maneuver by the federal government to take conservatorship of Fannie Mae and Freddie Mac, and the $1.25 trillion that the Federal Reserve spent buying mortgage backed securities. This is in addition to the $1.5 billion that was recently allocated to assist those states that were hit the hardest during the housing market crash.

Many opponents of the federal governments interference within the housing market believe that until the government backs out and lets the market correct itself there will be no way to accurately determine the true health of the housing market.
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