Here are a few last things about President Obama’s Homeowner Affordability and Stability Plan as presented yesterday at Dobson High School in Mesa.
I received an executive summary from one of my lenders last night that gives details on the plan, almost all of which I wrote about yesterday. But there was one paragraph that gave me pause:
Protecting Neighborhoods: This plan will also help to stabilize home prices for all homeowners in a neighborhood. When a home goes into foreclosure, the entire neighborhood is hurt. The average homeowner could see his or her home value stabilized against declines in price by as much as $6,000 relative to what it would otherwise be absent the Homeowner Stability Initiative.
Wait … you mean a whole $6,000? As in 3 percent on a $200,000 home? That doesn’t seem like too much protection given there are areas in the Phoenix real estate market that have declined by more than 50% over the past year or so. Many lenders are hyper-aggressive in their pricing, so 3 percent seems like a thin buffer that won’t really exist given the somewhat limited scope of the plan.
Nothing in the bill addresses the role of speculators who either can’t afford to hold on to the homes they purchased or simply walk away when they realize they made a bad investment. And nothing addresses those homeowners who are severely underwater on their homes and might be tempted to walk away rather than continue paying.
Don’t get me wrong … if the bill provides relief to some that’s better than doing nothing at all. But as Jim Little, a friend in Sun City, wrote in a comment last night …
At first glance it appears to be a cruel hoax to come to an area so hard hit and than deliver so little.
There are some areas and some homeowners this plan could benefit, including folks who bought their homes before the bubble and simply want a better rate but can’t refinance because their back at square one from an equity standpoint.
But these aren’t the people who are facing the threat of foreclosure. And so I and others are left to wonder what this really will do locally.[tags]Phoenix real estate, Homeowner Affordability and Stability Plan[/tags]