Today the US Department of Housing and Urban
Development (HUD) decided to conjure up some more money and create a new bureaucracy
called the "Emergency Homeowners Loan Program." It’s created for people that have fallen
behind in their mortgage payments due to unemployment, reduction in hours, or
medical issues. The program is a "bridge" loan for those who are in
foreclosure, pre-foreclosure, and in some cases can range from $35K to $50K for
a zero-interest two-year “loan.” Please
note: ‘loan’ was in quotes. It is specifically mentioned that "in some
cases, the loan would not need to be paid back."
Since the money is supposed to be used to pay
a "portion" of your past due loans, legal fees, and interest, it might be
important to know how much you are getting on the hook for, even if “it might
not need to be paid back.” Then, there
is the “chance” aspect of this program. There
is no indication of how many folks qualify, no picture of how the money is
going to be distributed, and a make-it-up-as-you-go approach has led to a
decision. The “Pre-app” folks who get approved will be entered into a “Lottery”
system, and the winners of that lottery will be the ones to get a (cough,
Makes that childhood game of “Monopoly” with
the “Chance” card seem simple by comparison. At some point, national housing policy has to
go beyond "Monopoly" and into a game with a little bit more deductive reasoning
to it: “Clue” perhaps?
Well, In the Northwoods of Wisconsin the signs
appear everywhere. Sales are up,
dramatically! Home prices have stabilized.
I, being positive on the housing market and negative on policy, remain
firmly entrenched with the belief we have bounced off the bottom and are on a
stable and steady incline.
no good news, at least these days, can be stated without a but, but this but
isn’t the kind that bottoms out our housing market. If anything it could hint towards a gas pedal
I remain tacitly fearful of inflation getting
out of control. I find it almost
humorous that the government’s Consumer Price Index no longer counts food or energy –
not that they are important staples to our economy (40% is only a fraction). A simple trip to the grocery store will unequivocally
show it’s here and it’s coming at an increasing clip. A symptom of policy? I think so.
So the question du jour is “When will this
inflation eek its way into the housing sector?”
Sooner rather than later is my opinion.
Three weeks ago Federal Agents backed by the
US Attorney’s office raided a St. Louis bank for failing to make sub-prime
loans. Gosh, I guess the collapse of our
housing market caused by sub-prime loans is so last week? It appears, thus far, that Washington has both
forgotten and moved on or this is the last ditch effort to restore a housing
market that has really done nothing but return itself to rational values. Today looks to be another similarly
well thought out plan.
Is history doomed to repeat itself? Are we creating a new bubble? Will all this extra currency floating on computer screens around the globe cramp the dollar even further? I think so.
If you’re a Realtor, Banker, Mortgage Broker,
Buyer, Seller or Appraiser you are well aware of the fact that the lending
requirements are draconically stringent right now. There clearly needs to be some sort of balance
and it appears that’s not where we are headed.
More often than not politicians will launch knee-jerk reactions in
the interest of public opinion over rational behavior and the current one appears to be on the mark of being no different. Are we really going to make lending affordable to everyone that it shouldn’t be? Seriously? Again? Couple this with inflation caused by
overspending, overprinting and oversaturation of US currency and we could be
looking at the perfect windstorm for housing prices as the great big bubble
making machine appears to be pumping far too much air into its tanks.
If I am right – there is no better time than
right now to buy a home. Local banks
have already told us interest rates will be going up soon. Prices are just off their bottom and if
inflation is truly rearing its head – I firmly believe there is no better hedge against it than
real estate… None.