Congress and Connecticut state law makers again placed their fingers into the housing market without knowing what they are doing. These legislators have placed so many restrictions on the normal foreclosure actions that the Banks, Attorneys. and the public in are in total confusion. This hurts those facing foreclosure, and it hurts the rest of us.
The Presidential staff developed a plan which Congress approved, to keep 9 million people in their homes. Since the program started, one million home owners have entered the modification program and only 12% (116,000) have completed the process. More than 61,000 have dropped out of the process. In addition to these dropouts, over a third of the homeowners who made three monthly trial payments have fallen behind. We, the taxpayers, paid $15 million to over 100 participating mortgage companies—did we really get the benefit we were promised?
Today the government is pushing for more action by the banks to help the owners in foreclosure. Again the plan is to toss more money at the problem– those the President has placed in charge seem to think that when the cash is delivered to the banks all will go smoothly.
This will not work because the government is erecting roadblocks faster than they can print money:
- The banking Commission rules now demand that the banks have a larger reserve account. This means that the banking rules require they stockpile the money that congress gave them
- Both the Federal and State governments have required foreclosures to be delayed. That delays the national recovery of the housing market
- There are 1.7 million REO’s (Real Estate owned by Banks or Corp) and Homes facing foreclosure that have not hit the market as of the third Quarter of 2009. This will drive housing prices down, and cause more people to walk away from their mortgages.
- At the start of 2010 The Federal Reserve will end the purchaser of Fanny Mae & Freddie Mac debt & securities. We do not know what effect that will have on the market but my guess is that there will not be enough money to float new housing loans, and so people will have a harder time getting a mortgage. This means that there will be fewer buyers, leading to decreased housing values.
- The FHA is increasing the mortgage insurance Premium to 2.25% for borrowers with a credit score under 580. This will make mortgages more expensive, and possibly harder to obtain. Again, this leads to fewer buyers for an already troubled housing market.
- The U. S. Environmental Agency has new rules taking effect April 22 2010 that require remodeling work on homes built before 1978 to be undertaken ONLY by contractors certified by their agency in lead-safe practices. This will result in more cost to remodel a house that will be sold.
The net result is that even more money has to be given to the banks, more governmental regulations will strangle our economy, housing prices will go down and continue to dive, and taxes skyrocket.
The Obama Administration is giving money to the bankers while not helping out many of the people in foreclosure. What’s worse is that the federal government is adding all kinds of rules and regulations that hinder our economic recovery. Washington’s must stop erecting these roadblocks to success and should get out of the way of our nation’s recovery.
A. J. BERNARD
CIPS, CRB, CRS, GRI,
RMU, RECP, CRA, PSCS
Bethel, CT Realtor
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