Will mortgage rescue plans from the gov?t prevent house prices from dropping?

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ScubaSteve_IHB

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I keep reading about Obama's mortgage rescue plan to prevent foreclosures. Will this prevent house prices from dropping or just extend the inevitable? As you all i know, I'm trying to stay patient and wait for the right time and am just wondering how these rescue plans affect me.
 
[quote author="ScubaSteve" date=1239885097]I keep reading about Obama's mortgage rescue plan to prevent foreclosures. Will this prevent house prices from dropping or just extend the inevitable? As you all i know, I'm trying to stay patient and wait for the right time and am just wondering how these rescue plans affect me.</blockquote>
I have two words for you......HELL NO!



It's nice press and looking good, but unfortunately it won't work. Think of it as filling the cracks in a dam with bubble gum. It may delay the fall of prices of bit, but sooner or later the market will find it's own equalibrium. You don't want to know what I'm seeing when it comes to commercial real estate properties having reviewed about 100 loan files...scary stuff.
 
I actually think that several of Obamas programs are going to work very well.



Just not here.



Not anywhere where you need a super-jumbo. Not anywhere that the bubble was 200-300%.



But it should work pretty well in flyover land, where prices only went up a bit, people didn't HELOC themselves out of their houses, and they didn't refi themselves into debt.
 
From what I can tell, the plan revolves around Freddie and Fannie loans... oops, not much help here in OC. While there are still F&F loans going into foreclosure here, they are few and far between. The low end is starting to slow in the foreclosure department, whereas the high end is really starting to heat up. I'm sure it will help some here in OC, but it might only help 2-5 people in Irvine at most, if any. Like FreedomCM said, it will work best in the flyover states where there is a huge presence of F&F loans.
 
[quote author="usctrojanman29 date=1239887616] It may delay the fall of prices of bit, but sooner or later the market will find it's own equalibrium.</blockquote>


That's exactly what I have in mind. Look at Japan's experience...their downturn lasted over 10 years.
 
Fed paper exploring just that question

<A href="http://www.bos.frb.org/economic/ppdp/2009/ppdp0902.htm">http://www.bos.frb.org/economic/ppdp/2009/ppdp0902.htm</A>
 
[quote author="freedomCM" date=1239888403]I actually think that several of Obamas programs are going to work very well.



Just not here.



Not anywhere where you need a super-jumbo. Not anywhere that the bubble was 200-300%.



But it should work pretty well in flyover land, where prices only went up a bit, people didn't HELOC themselves out of their houses, and they didn't refi themselves into debt.</blockquote>


And most importantly, where the average family income is $50,000 and the average home price is $130,000 to $145,000...
 
Loan To Value....especially in CA is the biggest issue. That's why the Obama bailout plan will not be able to fix CA's real estate problems.
 
I agree it will not help in California.



The first part is the lender must reduce the interest rate so the loan will not be more then 38% of the person's income. Then the goobernment will subsidize it down to 31% of the person's pre tax income.



The next explosion in California will be the ARM resets with very low interest rates. Effectively the bank would have to lower the interest rates into a negative interest rate just to get the loat to 38%.



Don't forget this next set of resets will be full of neg am and interest only loans.
 
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