Last Friday Pres. Bush proposed a plan to help homeowners burdened with subprime loans who are in default help keep their homes. He proposed that the Federal Housing Administration be allowed to guarantee mortgages, for low and middle income families, 90 or more in default be able to refinance at a lower rate or more time to repay loan. Unfortunately, that does little or nothing to help the more pricey OC residents whose mortgage is over the $417,000 cap.
Others, like Pimco’s Bill Gross, suggest a taxpayer funded relief program to help those going into foreclosure. This is infuriating many people who believe that these people are getting what they deserve because they some how cheated the system because the shady loan they received or that they bought too much home or that they made the housing prices rise to unrealistic numbers. Bill Gross believes that this would help minimize the risk of recession because it would keep home prices from falling.
But better yet, are the short term interest rates going to be cut? Fed Chairman Ben Bernanke said that a rate cut is indeed on the way. He stated the Fed “will act as needed to limit the adverse effects on the broader economy that may arise from the disruption in financial markets.” We can expect to see what happens on Sept 18th. Let’s hope that somewhere out there’s a bailout plan or federal rescue that can save the homes of the ever increasing home foreclosures.
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