Noting that about a third of home sales nationwide involve distressed properties, a Washington Post article published on November 10, 2011, offered three suggestions that could help soften the blow as U.S. home prices fall even further than they already have. The “several smaller steps that will make a meaningful difference” recommended by the Post included:
- Allow for higher conforming loan limits for another year — When private mortgage lending collapsed during the recession, these limits that determine the maximum loan lenders are permitted to insure were increased temporarily. But the higher limits expired in October, and the Post said there is some evidence that the change has hurt. While allowing the conforming loan limits to decline will be necessary to ease the government out of its role as the nation’s mortgage lender, the Post said now is not the time while the housing market and the economy are still in trouble.
- Extend new rules for mortgage refinancing to all Fannie and Freddie borrowers — Despite changes designed to encourage refinancing, numerous homeowners have been unable to take advantage of near-record-low mortgage rates to reduce their monthly bills. The Post suggested that in order to promote more refinancing, Fannie Mae and Freddie Mac could apply new rules to all the loans they insure, giving more than 14 million homeowners an opportunity to significantly reduce their mortgage payments. For the millions in need of foreclosure help, the lower payments would help keep these homeowners from defaulting and thus adding to the pile of distressed-property sales.
- Allow investors in foreclosure and short sales next year to expense their investments for tax purposes up front — The Post said giving investors a small tax break should further “juice up” demand, supporting prices for distressed homes and the market in general.
The Post noted that “there is no silver policy bullet” to deal with the falling home prices, but the three proposed policy steps would cost taxpayers little, if anything. If you are currently facing foreclosure, contact our Washington DC bankruptcy lawyer to see how a Chapter 13 or Chapter 7 bankruptcy process can help you reestablish credit and keep your family in your home.
Law Firm of Kevin D. Judd – Washington DC bankruptcy attorney