My wife and I were watching the news for most of the morning today. We saw the candidates, the President, Chairmans of the Fed and Treasury, etc. The essence of todays news is that somehow or another the government is going to "buy" the inventory of bad loans from troubled banks. I guess similar to the Resolution Trust from the late '80's.
While my statement may not be 100% factually correct .. that is the essence of it to the tune of hundreds of BILLIONS of dollars. In government terms that will probably not be billions when they are done but will actually be trillions.
So my wife made a comment and I had to think about it for a minute and then I thought .. why not? her comment was , "Why don't they just give the money to qualified buyers to help them buy homes? Maybe in the form of a (temporary?)rate buydown instead of a down payment".
So maybe the buyer have to come up with 3% down for an FHA loan and then they qualify at todays rate of 6% or so. But then the payment is bought down to say a rate of 3% or 4% and maybe even have the rate slowly graduate up to the full rate over a period of years so there are no huge adjustments or payment shocks.
Think about it. At some point all of the homes need to be sold anyway. Don't use the money for down payment assistance, use it to make the homes more affordable and then let the banks continue to sell the homes themselves. This would increase home ownership, and dramatically stimulate the housing and construction industries. The banks get out from under the loans, although not as quickly as they would in a gov't buyout.
All of this is just sort of my first gut reaction, and I would rather the gov't not get involved at all. At this point however, I don't think that there is any avoiding gov't intervention anyway.
In my gut I think it would be better to give the money directly to the public rather than to create another government entity.
Have I totally lost it? Or am I on to something? Tell me your ideas.
Bob Southard, e-ProRealtor®, Solid Source Realty, Inc. Buy or sell a home in Powder Springs, Marietta, Kennesaw, Acworth, Dallas, Hiram,and Cobb, Paulding, Douglas, North Fulton, South Cherokee, County, Ga
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