- May 3, 2024
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As I was paying my mortgage online this week — for the house I bought in 2006 — which has lost about 50% of its market value — while my income as a real estate broker has significantly eroded — I heard a news report in the background that Uncle Sam is going to help folks out with a $25 billion handout to rub salve on the pain of those aggrieved by the crumby housing market.
See, what we’re going do is give $2,000 to those who lost a home (especially if a robot signed the foreclosure papers) and subsidize others in a bad situation to refinance. And the neat thing about it is those of us who have been hammered hard will pay for it! How cool is that!
Who says they have been hurt more than I have? Maybe I dug deeper to avoid a foreclosure, or at least a short sale attempt. The reason I’m not quite upside down — yet — is because I put a huge chunk of what I used to have into my down payment. Now, it’s all gone!
I sit back and am truly mystified by this government intervention. Don’t they get that this will only slow down the rebound of the housing market by messing with the market dynamic?
This is not what we need in Flagler County.
If someone has missed four or five mortgage payments and the government says, “Here’s a no-cost refinance for you,” what are the chances that that person will default again within a year? Hint: 80%!
The truth is that reducing a payment by $100 to $200 per month is not enough for someone in a real financial jam. So, the result is an 80% chance of another foreclosure, just delayed for a year. That prevents the bottom of the market from being cleaned out — in your neighborhood and mine.
The crux of the problem is the 450,000 Florida homes in bank “shadow inventory” — those homes in the bank’s control, but not yet for sale. At normal absorption rates, that’s an additional 2.5 years of distressed property clogging the system here in Florida. Why won’t the government simply let the market find its own equilibrium, without intervention?
