I am a local realtor specializing in San Mateo and San Francisco Counties Real Estate. I do not think the $15,000 Home Buyer Tax Credit in Economic Stimulus Package is making best use of the tax payers money.
First and Foremost to stop and slow down the hemorrhaging of the Real Estate market we must try to limit foreclosures, short sales and strive to keep the homeowner in the home. A very common situation is a homeowner with a $700,000 mortgage on a home with a $500,000 value in today’s market. A loan modification of interest rate reduction will not do the trick. Debt forgiveness or I suggest debt set-aside will make more sense for both the owner and the mortgage holder and the market place. I suggest that the first lender modify the loan principal to the market value as long as the owner is qualified to make those payments. The remaining balance owed will be set aside until the property is sold. When it is sold the owner and lien holders will share in the increased equity 50/50 or maybe 25/75. The owner must be given some incentive to continue making the payments and maintaining the home. The owner is wining from the upside and having a place to live, the bank is wining by converting a non performing loan into a performing loan and also by saving a minimum of $50,000 in the foreclose and resale process, the American People win by having less distressed homes on the market bringing the prices down further. Other positives are homes are not abandoned, homes are maintained, property taxes are being paid, are just a few. The second lien holder may not be satisfied so possibly some money from the Economic Stimulus package could be used to satisfy them. I believe if these homes are held for five plus years all lien holders will get pretty much all of their money back. If not maybe the set-aside principal will follow the owners to their new home.
The present plan of a Home Buyer Tax Credit and waiving any payments after purchase is not a motivating factor to buyers. It is a bonus or a reward but not a stimulus. It is not helping more people purchase homes. If we cannot keep the home from foreclosure the following are suggestions I offer:
· Use money from The Economic Stimulus Package to let new homebuyers upgrade their home. Many of these distressed homes on the market have lots of deferred maintenance. Many homebuyers presently cannot purchase these homes because after their down payment they do not have money for repairs. Less people able to purchase homes brings values down more making even more homeowners owing more than the home is worth. Let’s assume the appraiser says the home needs a new roof or appliances a Federal Grant from the Stimulus Package is given to the buyer at the time of closing for this sole purpose. This might be difficult to monitor but it will add more equity to the property, upgrade neighborhoods, put contractors to work and allow more people to purchase a home.
· Use money from The Economic Stimulus Package to buy down interest rates creating lower monthly payments and allowing more people to purchase a home.
· Use money from The Economic Stimulus Package to add to buyers’ down payment adding equity and lowering the buyers’ payments allowing more people to purchase.
I do not support lowering loan qualification requirements.
I understand there is immediate urgency in getting a plan in place. The present plan as it stands will definitely help and we need that. Please do not delay passing a plan any longer. I might be late with these suggestions but please keep them in mind when a new or revised Stimulus package is discussed.
Sincerely,
Lee Ginsburg CRS,SRES
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