Chief Economist of the Real Estate Center at Texas A & M University pointed out that there are four things the government that should do to help the housing industry come back to life. Here is his four-part solution against foreclosure:
As simple as keeping homeowners in their houses.
Slowing down house supply.
The economist pointed out that the market has the constant simple rule of supply and demand. What is the sense of continuing to build new homes when there are few buyers and frenzy against foreclosure?
Median sales rate of existing homes are already 11.3 percent down compared to last year based on the report of the National Association Realtors.
Foreclosure increases home supply, so home repossession must be stopped or if not possible, just slowed. The government has been taking steps in solving the foreclosure crisis, and yet it seems inadequate. Freezing interest rates and bringing principals down for the troubled seems unfair for the on-time payers. Only the fear of foreclosure and bankruptcy limits these on-time payers.
Many have lost hope in the housing industry thereby having less investors. Fannie Mae and Freddie Mac are now having difficulty selling bonds for capital.
Raise the demand.
This is possible by stopping the plunge of home values by giving incentives to buyers of vacant homes. Depreciation schedules for these buyers must be lowered to 5 to 7 years. A 0 percent capital gain can also be offered for those who kept these homes for more than 5 years.
Guaranteeing mortgage bonds for “Frannie”
Mortgage rates are so high that there is less confidence on the financial reliability of Fannie Mae and Freddie Mac. The noted economist said that he foresees the government contributing to give “Frannie” capital by guaranteeing mortgage bonds. Hopefully this will bring loan rates and let American homeowners refinance their homes and avoid foreclosure.
![[Valid RSS feed]](http://www.realestateproarticles.com/images/icon_Rss.png "XML Feed For RSS"){kind=icon}
Category Rss Feed
Print This Article
Add To Favorites