http://finance.yahoo.com/blogs/dani...e-non-profit-lender-doing-help-150316843.html I was hopeful banks would do this voluntarily or the HAMP program would do this on a larger scale. I like it and wish this would be expanded. The government could utilize a new tax credit or perhaps a type of build america bond for state bond banks and local governments to get this going on a broader scale. Thoughts?
How can they a home at a high price and re-sell it to the former owner at a lower price with better mortgage terms and still provide investors a 4.25% annual return? I suppose they'd have to take a hit on some of their other profitable operations.
They're not buying at the 2007 value of these houses, they're buying that at present market price. They're buying the foreclosed property. Banks have to charge based on the current market value of those homes. (which is obviously lower than the mortgage they gave out before the bubble) On top of that you can get even bigger discounts. Essentially all this company is doing is paying current market value for the foreclosed houses and then they turn around and give a mortgage that reflects the actual current value. And they collect interest on that so that's where their returns come from.
So if Obama jumped on this tomorrow and authorized bonds similar to the BABs should it be supported or is this more goverment intervention and rewarding people who bought more house than they could afford?
If Obama jumped on this and authorized bonds, it SHOULD be supported. Unfortunately, the usual suspects would crow about "more government intervention" and scapegoat people who they say "bought more house than they could afford."
Jon Stewert said it best, they should have offered the bailouts to the people but only in a form in which they could pay down their mortgages, this way the banks would have gotten the capital they needed and the people would have kept their houses. And the banks would have been forced to keep lending to make more $$$$... Meh, makes too much sense to ever happen. DD
Obama should not be able to replicate this, because it is not something the government has the power to do (constitutionally speaking). Any number of banks (or private individuals) should be willing and able to do this though. There would also be no need to limit the buyer to the original owners.