The facts show that, four years after the peak, the housing market is still struggling. Things may be getting "less worse," but it's still remarkably bad, in too many areas, across the country.
• The pace of foreclosures is slowing, even as lenders took back more homes in August than in any month since the start of the U.S. mortgage crisis, RealtyTrac reports.
• Existing home sales in July plunged 27.2%, the most on record.
• The number of so-called underwater mortgages has declined for two consecutive quarters. However, in June, there were still 11 million homeowners stuck with a mortgage greater than the value of their home, according to Corelogic.
So far, the government's HAMP -- mortgage modification plan -- and most other government solutions have failed to change the dynamics.
With that in mind, Glenn Hubbard, the chairman of the Council of Economic Advisers under President George W. Bush and the dean of the Columbia Business School, says he has a plan to help turn things around.
He proposes having government-sponsored entities like Fannie Mae, Freddie Mac and Ginnie Mae offer quick and easy refinancing to underwater homeowners.
He writes in a recent New York Times op-ed:
"Consider a family that bought a home in 2006 for $225,000, taking out a $200,000 fixed-rate mortgage at the prevailing 6 percent interest rate with monthly payments of about $1,200. That home is now worth about $175,000. The family still owes $189,000 and thus cannot refinance because they are underwater.
"But under our proposal, the family would be offered a new mortgage at today's prevailing rate of 4.3 percent. The family would see a 15 percent decline in their monthly mortgage payment, saving more than $2,000 per year. This would not only help homeowners through the current crisis, but would be the equivalent of a 26-year tax cut of more than 4 percent of income, assuming the family spends around 30 percent of income on housing."
Sound great? It might work, but as Aaron and Henry discuss in this clip, having GSEs back these refis would be one more taxpayer-backed bailout for banks in danger of losing money on their real estate holdings.
Hasn't the taxpayer done enough already?
Logged
• The pace of foreclosures is slowing, even as lenders took back more homes in August than in any month since the start of the U.S. mortgage crisis, RealtyTrac reports.
• Existing home sales in July plunged 27.2%, the most on record.
• The number of so-called underwater mortgages has declined for two consecutive quarters. However, in June, there were still 11 million homeowners stuck with a mortgage greater than the value of their home, according to Corelogic.
So far, the government's HAMP -- mortgage modification plan -- and most other government solutions have failed to change the dynamics.
With that in mind, Glenn Hubbard, the chairman of the Council of Economic Advisers under President George W. Bush and the dean of the Columbia Business School, says he has a plan to help turn things around.
He proposes having government-sponsored entities like Fannie Mae, Freddie Mac and Ginnie Mae offer quick and easy refinancing to underwater homeowners.
He writes in a recent New York Times op-ed:
"Consider a family that bought a home in 2006 for $225,000, taking out a $200,000 fixed-rate mortgage at the prevailing 6 percent interest rate with monthly payments of about $1,200. That home is now worth about $175,000. The family still owes $189,000 and thus cannot refinance because they are underwater.
"But under our proposal, the family would be offered a new mortgage at today's prevailing rate of 4.3 percent. The family would see a 15 percent decline in their monthly mortgage payment, saving more than $2,000 per year. This would not only help homeowners through the current crisis, but would be the equivalent of a 26-year tax cut of more than 4 percent of income, assuming the family spends around 30 percent of income on housing."
Sound great? It might work, but as Aaron and Henry discuss in this clip, having GSEs back these refis would be one more taxpayer-backed bailout for banks in danger of losing money on their real estate holdings.
Hasn't the taxpayer done enough already?
Logged
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