Tax Payers and Mortgage Payers you are the bedrock the new administration is banking on. In return, they will save only those individuals who have jobs and could pay their mortgages if they had taken fixed rates instead of adjustable rates. Now if you happen to be one of the few with a job who can not pay your mortgage, can you imagine what the government loan application will look like? Apply today and 60 days from now you may have approval. That's 2 more mortgage payments. And if you can't make the payments, guess what foreclosure proceedings.
I know what you are thinking - How does this solve anything? Well the answer is it doesn't solve the mortgage crisis. What it attempts to do is repeat the efforts of the Bush and Paulson strategy - If you act like you are helping, and allocate funds to help a sector of the economy, lenders will pause their collection proceedings. If collection proceedings are paused or slowed, maybe some good news will come to the fore and the economy will reverse direction. Rumor and Conjecture and News Releases - These are the standard Wall Street and Capital Market's responses to bad times.
But in this case, perhaps the allocation of new money to assist the mortgage crisis will accomplish the goal of the real smart guys of the US economy. And that is establish a floor of downside so we may be able to value US real estate properly and efficiently again.
The value of a home is based upon the relative value of similar homes in its neighborhood. One or two homes selling at low rates and the value of all homes declines. I have it on good authority that a group of Ft. Lauderdale real estate agents were pooling personal funds as early as June 2008 and buying homes at ABOVE MARKET PRICES in a silly attempt to bolster selling prices of their clients homes based upon relative value. Is it legal? We'll see.
So what's the value of the Obama Housing Bill? Not much. The US public has been leveraged, US business has been leveraged, US markets have been leveraged, and now the US government has been leveraged..each one is showing signs of cracking. Look out below readers. You'll know when the entire system goes into free fall when the US dollar begins to fail.
Build value on a simple strategy - earnings and unencumbered assets - and ignore the noise of leveraged returns. They are false, short term returns. See your business like a farmer sees his business - incremental returns, and protect your assets every day.
Build value every day.
Brad van Siclen
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