With all the foreclosures, short sales, write offs, job losses. Who will be left to get this economy going? I have said many times the government must key this crisis recovery at the strong. They must make guarantees and funding available to investor that can and will buy the distressed assets. They have since spoke about and worked on various programs to start it up. They must focus more on each niche.
Niche 1, Recycling Our Population
What is to happen with all the people who went under water, many of which were not financially stuck but there asset went under water. This was not their fault but the fault of government policy makers, banks and financial institution that over pumped the market. Should they be left out of the market for a long period because of this?
For example:
Home buyers Jack & Jill bought a house for $1,000,000 in southern California. Jack & Jill put 10% down and got a 90% mortgage. Jack & Jill's home came down in price and is worth $500,000 now. Jack & Jill chooses to walk, they were under water $500,000 and had no hope of getting back to where they started.
Home Owner Jack & Jill had a job and were financially ok, but their credit is damaged now from the foreclosure. What should happen now? Should Jack & Jill's credit stay bad for sometime until he could participate again or should Jack & Jill be forgiven.
I say, individually underwrite Jack & Jill a new load so they could buy a house in the current market. Adjust the credit score to compensate for the foreclosure or don't use a credit score at all. Look at the ability to pay. It was not Jack & Jill‘s fault that all the rules were broken and government policies and overzealous financial institution cause a bubble. We need Jack & Jill back into the normal market.
Recycling is what we do with everything else; we must do it here also. Would you have stayed?
Richard
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