As it has been stated many times, the Obama administration needs to pay more attention to the falling home prices in the country and especially in Nevada. Nevada had suffered enough. It was a vicious game played by lenders, mortgage companies and of course real estate agents and those tv gurus who always suggested to buy more real estate as a hedge against inflation. Roughly 1 in 4 mortgages today exceeds the house’s value. Remarkably, 1 in 15 mortgage delinquents is actually current on credit card debt. It’s an unprecedented reflection of how much mortgages exceed home values. Consumers are just unwilling to put more money into their homes. Research shows that when a home’s value falls below 75 percent of the outstanding mortgage debt, homeowners seriously think about walking away.
With declining prices beginning to hit the middle to higher ends of the housing market, we are looking at another foreclosure wave. Here’s the gravity of the crisis: Roughly $750 billion of residential mortgages are upside down. That’s equivalent to the entire fiscal stimulus program. We suggested many times that the following action can stabilize the falling home prices. We are listing these actions again here.
1. All interest rate should be fixed at 3 percent.
2. No documentation should be required.
3.Everyone should be eligible regardless of his/her financial status.
4. No distinction be made between personal and investment property.
5. More incentive should be given to banks and lenders for doing loan modification.
Here is the report from US News: