December 10, 2010

FHA Mortgage Relief Program Inhibiting Full Market Recovery

Summary

The FHA is pushing a mortgage relief program that Fannie and Freddie are hesitant to embrace. This program will further delay the recovery of the housing market. Foreclosures should go through.

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The FHA is pushing a mortgage relief program that Fannie and Freddie are hesitant to embrace. This program will further delay the recovery of the housing market. Foreclosures should go through.

The advantage of having foreclosures work their way through is that home prices can adjust and make housing affordable once again. The more foreclosures we have, the more house prices will have to decline. As prices go down, we will begin to get back to more normalized housing prices and not the bubble prices we’ve seen the last decade. It’s best to let home prices adjust to where they should naturally be instead of rigging them to benefit certain groups in society.

Housing prices don’t have much farther to drop. The claim that prices will be cut in half if we don’t do something is unfounded. We have a growing population and unemployment will eventually wittle away. These claims are scare tactics, not sound economics.  I would estimate prices have about 15 % more to drop, varying depending on the area.