"25 BILLION Dollar Housing Handout?"

$25,000,000,000 Handout

As I was paying my mortgage online this week...
for the house I bought in 2006... which now has a market value of about 50% less than I paid for it... while my income as a Real Estate Broker has been significantly eroded...

I heard a news report in the background that My Uncle Sam in Washington, was going to help folks out with a $25,000,000,000
(yes, those nine zeros take us into the Billions) handout, to help rub salve on the pain and suffering of those aggrieved by the crumby housing market.  See, what we're gonna 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 re-finance!  And the neat thing about it is that those of us who have been hammered hard, albeit "2 strokes shy of dead," will pay for it!  How cool is that!

But, wait, who says they have been hurt more than me... or that maybe I dug deeper to avoid a foreclosure, or at least a "short sale" attempt?  You see 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... and 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?  If someone has missed 4 or 5 mortgage payments and the government says, "Here's a no-cost re-finance 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-$200/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, keeping the bottom from being cleaned out.


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.  That’s nearly double the second place State of California, with “only” 225,000!  At normal absorption rates, that’s an additional 2.5 years of distressed property, clogging the system here in Florida.  A look at the Flagler County Realtor Multiple Listing System (MLS) shows that 60% of single family home closings in the past 6.5 months in Palm Coast are already distressed sales (split almost 50/50 between foreclosures and “short sales.”)  It’s hard to watch Palm Coast friends and neighbors go through this, yet the primary action in First Aid is to “stop the bleeding.”  This new government intervention will only prolong the agony.

Why won't the government simply let the market find it's own equilibrium, without intervention?
Hmmm, you don't think that politics and winning votes in the next election has anything to do with it, do you?  Nah, how silly of me to think that way!