IF ONLY IT WERE TRUE
In an effort to end the foreclosure crisis, the Obama administration has been trying to keep defaulting owners in their homes. Now it will take a new approach: paying some of them to leave, suggests a reckless article in the New York Times.
This latest program, which will allow owners to sell for less than they owe and will give them a little cash to speed them on their way, is one of the administration’s most aggressive attempts to grapple with a problem that has defied solutions. Lenders will be compelled to accept that arrangement, forgiving the difference between the market price of the property and what they are owed, erroneously claims the New York Times article.
THERE IS A MAJOR PROBLEM WITH THE POLICY
What the New York Times article fails to address is that banks have little to gain from waiving a deficiency judgment under the Program, incentives or not. Moreover, HAFA is only a “guideline”- not a law, so the Courts cannot enforce it- even if asked.
Certainly, some homeowners will benefit from the program, but Las Vegas won’t be much affected, in all likelihood. For that to happen, a more aggressive housing approach, like an own-to-rent program, would be necessary. Or, most effective of all, the economy would need to begin creating jobs again.