Saturday, April 5, 2008

Help for homeowners???

From time to time I see an interesting juxtaposition of seemingly unrelated news items. Such was the case this past Thursday in the New York Times. In the news was a report on the approval of a bill to assist homeowners at risk of foreclosure. In the final version of the bill the only item that could even remotely help homeowners was a provision for funding counseling for those about to loose their homes to foreclosure. HUH? That is like the t-shirt on the little boy that had printed "My parents went to Hawaii and all I got was this lousey t-shirt". Home builders, on the other hand, will fare a bit better. They will be able to carry back financial losses on their books & can immediately recoup taxes paid for the last four years. How long do you think it will take for a bunch of other industries to hold up their hands and demand the same treatment? Another provision will provide a tax credit of $7,500 to someone buying a house out of foreclosure.

An unrelated story in the same issue of the Times told about a couple in Detroit waiting to sell their home to relocate to another city for a new job. Despite reducing their price they have been unable to sell in part because they must compete with foreclosed homes on the market. So the foreclosed house down the street they are competing with now has a $7,500 cash bonus attached to it. This will likely help the mortgage company sell their house but how does it help the homeowner? It doesn't, quite simply. In fact, to maintain their competitive position they may need to lower their price by $7,500 or more. But hey, they can get counseling!!

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