That is the bottom line.
Today’s housing market needs a dramatic overhaul and it’s been long overdue for a fix. So we don’t have the time to be contemplating moral hazards anymore.
So I’m OK with President Obama extending mortgage assistance to owners of multiple homes.
Borrowers who qualify for HAMP can have their monthly payments reduced through lower interest rates, longer mortgage terms and forgiven principal.
Landlords can apply for loan modifications for up to 4 mortgages as long as they rent out the homes or plan fill them, according to Bloomberg, who says about 700,000 landlords might qualify.
This has angered some, who are saying the administration is rewarding speculators who may have caused the housing market to collapse, and should focus solely on those who haven’t been able to pay their mortgages because of financial hardship. In a dream world, they would be right.
The problem with that notion is while speculators may have played a role in the housing market collapse, I still lay most of the blame squarely on the banks. You might say a so called ‘house flipper’ was only buying homes to pad their bottom line, to which I respond, what exactly do you the banks were interested in?
They were the ones engaging in rampant fraud, not the speculators.
I must again go back to this 60 Minutes piece about abandoned homes rotting their neighborhoods from the inside out. Banks response to these vacant properties has been to walk away from homes and allow them to go to waste.
If that is the alternative, then I will gladly welcome a house-flipper into my neighborhood.
They still make better neighbors than the banks.
Besides, there are renters out there who need to stay in their homes, and just like many borrowers, they too have hard-luck stories that rival if not surpass those of people who have lost their homes to foreclosure.
And not every multiple property owner is a speculator. Many are also just regular working Joes or people who were using the real estate market as a source of retirement income.
The housing market is in real trouble, and it won’t turn around unless we stop looking concerning ouselves with the theoretical construct of moral hazard and start paying attention to the bottom line.
After all who got bailed out just a few short years ago? It wasn’t the homeowners but rather the banks.
If the possibility that a ‘buy and flip’ investor might get mortgage relief is the chance this government has to take in order to keep renters in their homes and get the housing market turned around, than I say it’s a chance worth taking.