Fixing the Housing Market

just wondering if any economists have given thought to a simple solution ..fix the broken legal immigration system. I am a legal highly skilled immigrant stuck in immigration mess for the last 8 years with good credit score with downpayment. however I won't buy a house till I get a green card ..and hence a large segment of potential buyers are just shut off from the market.

G.P. Thank you for your insight. Although it's great to see someone thinking along the lines of "making sense" I wish those who are making the actual decisions would just actively listen. Like another poster said, "unless you are in the trenches of it, you will not be able to understand. Living here is Riverside, California in a community of new Centex homes, I am beyond infuriated looking at all the foreclosed signs around me and watching our home value diminish to nothing. My husband and I were the regular conventional borrowers, 20% down, good credit, etc, etc, but because of a lay-off of my husbands 2nd job, skyrocketing fuel, food, electricity, etc. we've been really, really struggling. Thank God we haven't missed a payment on anything yet but we are on that cliff looking down trying to hold it together. Instead of loaning (giving) 700 billion to the financial institutes that tax payer money should have been worked in a way that directly benefited the taxpayer. How can refinance a $580K loan balance when the house is now appraised at $455K? Why does the government seem so resistant to helpping us directly? Another 1200 stimulus check will do nothing nor do we want it. The biggest stimulus you can give to us homeowners is by just what you intellectually explained. Not only will the economy move again but the government will be making money. Win/Win. Stuck in Riverside

My response to the interviews yesterday in Washington, D.C. with FDIC Chair Sheila Bair... I was refinance customer in 2005. The broker advertised in Chicago on the radio. I was with Countrywide at the time with a fixed 30 year loan. I called Countrywide listened to them as to what they could do to finance home improvements on my house. I called the broker from the radio program which is still on the air only under a different title and listened to what they had to offer. The rates were better from the broker as he suggested that he had a product that would extend the duration of the loan by 10 years and it would be flexable and to come in to learn more and bring check stubs and tax returns. So why not? I went in to speak with him. I was gainfully employed, never missed payments on ANYTHING and had a excellent dredit rating. He told I will tell you this is an ARM loan, I said I haven't heard anything good about those loans. He emphatically explained that it was differnt from those I have heard of and this was a special "new" product and has many satisfied people. He said since I was going to stay in the home at least another 10 years it would be ideal for me and it would be better than anything Countrywide could do. So he set up a day after my verifications were made and of course I more than qualified. To make a long story short, when I got my statements I olmost had a heartattack. If you read the paperwork it did not reflect anything what I was seeing or hearing. So I called to see if I could fix this crap. 18 months of phone calls to no avail. The broker was fired 2 months after the loan, the loan was sold off. The servicing company said they could only refinance if were to give them over $9,000.00 as a penalty. Or foreclose if I would like. I asked a specialist Attorney firm to see my docs and they found it to be totally fraudulent in many ways. So criminal are criminals are criminals. I am prosecuting these criminals. Why not? Or can I walk in to the bank sit down and talk nicely to them and ask if they could PLEASE PASS THE CASH DRAWER? Thank you see ya !!!later! HUH? After being served with valid rescission by the attorneys, they broke the TILA Act again. They retaliated against me for the nerve of getting an attorney, and put a default on my credit report. Then proceeded to foreclose on our home. In county court the forclosure was CANCELLED! And referred to the Federal Court for action against them. I expect I will have go to civil court also. So as far as I am concerned They were fraudulent rip-off artists to both customer's AND investors. Nobody could know the mechanics of these greedy schemes. They were designed to do nothing but steal money and property from customer's, period. The government authorities looked the other way for the reciept of contributions and kickbacks. So don't give me any jibber jabber about how the homeowners were stupid_BS. They made a vicious money game out of the economy and played with other peoples lives and money through pure fraudulent and deceptive practices, and everybody knows it now. Some will defend this slime to the grave because they are slime themselves. NO MORE BS! Period. The FED bailout is upside down! It should restore the customers (American People) or commonly called...taxpayers, that were defrauded first and foremost, then prosecute and fine and imprison the offenders, COMMONSENSE! Anybody have that anymore? Greedy filth CEO's and CFO"s of these excrement mills call BANKS! They have the profits safely put away and live the life better than kings (uneffected personally by the crisis we the people are in, while the Bank Corps. get taxpayer infusions of money so those entities continue after the mass destruction that they caused to U.S. Economy and homeowners and families. They inflicted irrepairable harm to my family, so we are stupid...rediculous bunk! Mass Preditory Lending for a greedy system of corruption. Wakey Uppey! Thank you. Art S. in Lombard, Illinois

While traditional FHA loans are doing great, the FHA Secure program was a total flop. It was disingenuous for Mr. Montgomery to give credit for regular FHA loans to the largely failed "FHA Secure" program that was announced last Fall by the White House.

And before anyone out there accuses me of being an unfeeling monster: Does the child molester deserve a "owned" house? Maybe the one next to you? How about the serial rapist, murderer, thief, prostitute, drug dealer,terrorist, or other scum of the earth? Way, way too many people in this country think the world owes them a living. Guess what? We DON'T!

Not everyone deserves, or needs, a "owned" house. That's why people rent. Nothing wrong with renting. Houses (for an individual ) are not, and never should be, an "investment". It's a place to live. Shelter from the elements. At most, it is a place for your descendants to live. The "Flip that house" mentality is a mental aberration, and/or criminal activity, that should be treated with strong medication, and electroshock therapy.

tim, thanks for the response and reading it. not sure i my quick blog response hit all my points.i will contact you and look forward to exchanging ideas. G.P.

One way to stabilize housing is to tear down all the stand alone forclosed housing that are not being lived in and recycle all the materials back into building material and leave a vacant dirt lot next to the existing homes that are still stable and owned by responsible people. That not only creats jobs but room for growth of affordable housing and revive the building industry and not have forclosure houses being comped to the rest of the neighborhood.

In order to get rid of the supply you must qualify homeowners.. As of today if a self employed person wants to put down 20% and has a 789 unless he showed all income without backing out alot of expenses he is turned down for a debt ratio problem. So he paid taxes on his expenses and must pay taxes again on his net income or he does not qualify...this would be a great loan but no...cannot use bank stmnts nothing have to show net income or a turndown...this is one program that needs to come back..and as for the homeowners if they would have removed score credit score that is and paid attention to the pay history of the individual. ie. perfect mortgage payments last 12 mths auto refi off that adjustable rate to a fixed payment we would not have this problem, we cannot do those today so more foreclosures coming, what a bunch of dumb a you fill in the blank..from one extreme to another just to lock up the market...until they get rid of supply and keep people in their homes (not with our money) with theirs we won't recover.

Karl Case is exactly right. You can not help everyone, simply because they over-spent and can't pay their mortgage. For two years, I sat in front of people signing loan documents asking if they understood the way their mortgage worked, and they not only didn't understand, but they didn't care! You do have people out their that have a true hardship, ie. lost jobs, lower income, etc., and they are NOT being helped, because the market is flooded with people that either lied to get the loan in the first place, or pulled their equity out multiple times and are now upside down. Instead of foreclosures, I truly believe that the "short sale" is a better way to go. You simply can't modify everyone's loan. At least in a short sale their is a buyer willing to pay fair market value for the house so the sale does not affect everyone else in the neighborhood's value. In addition, that buyer is getting a NEW loan, and will most likely spend some money in "sprucing up" their new home! Isn't this the idea? Get the money moving so to speak? If the banks could get a handle on this, ( I believe Ms. Bair said something to the affect of a systamatic process) instead of taking 6 to 9 months to review a short sale package and give an approval - then we could get some of this inventory out of the market, and avoid foreclosures. Better yet, if the banks would actually BE PROACTIVE, and based on the appraised value of a defaulted mortgage, advise the homeowner how much they will reduce their debt by, then the seller could actually sell their house knowing the bank will take less, and the homeowner would know in advance exactly what their price with closing costs needs to be! The process of a short sale now is so ridiculous, that it is almost impossible to get them closed. Not only that, if you saw the fraud associated with loan mods, short sales, etc., you would ask - WHERE IS THE REGULATION? Sheila Bair is also absolutely right. The banks DO NOT have a handle on any of this, which gives a direct window to fraud. Streamline the short sale and modification process for all banks, directed by the FDIC, just like she's doing at Indymac. Along with this, we do need liquidity, as the lenders these days are asking for the moon. I actually had a lender tell me today that a perfect borrower's loan could not fund, because they were "reviewing the review appraisal"! 3 Appraisals in a matter of 2 months! The sooner we come up with a realistic systamatic solution, the longer this is going to take, and the worse it will become.

Too many people are watching too many irrelevant numbers. You can't build housing, and then expect the buyers will come(demand). Housing demand is driven by the availability of affordable housing to all classes of homebuyers. In order for there to be a housing market again, the average selling price of housing must be affordable to the average worker, or in reality, the average wage. So, if you do the math, while there may be outliers with locational markets and market niches, the average selling price still needs to come down about another 25 to 30 percent from where it is now in order to match up with average wages, vis: afordability. And THAT is only true if the average wages stay where they are. And, it presumes an adequate supply of capital. If in a couple of years average US wages drop 10 percent, then guess what. Given that we have just begun the Jumbo and Super resets, we still have a long way to go.