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Monday, November 3, 2014
Why There Are No First-Time Home Buyers
An insightful and well-documented analysis from Tyler Durden on the Zero Hedge blog deserves a re-posting here. Durden points out that the new FHFA head, Mel Watt, is looking to slash lending standards to facilitate more buyers, although in an environment where housing in many markets is arguably overvalued (and that may be a mild assessment) it follows that subsequent price declines are likely if not probable and thus the people supposedly being targeted for help would then become a new wave of underwater owner victims.
A related issue is the concept of bailing out delinquent homeowners in order to stabilize residential real estate. Such proposals have it backwards.
Delinquent homeowners are not the backbone of any housing market.
The backbone, the support, the foundation -- now there's a word -- for the housing market is the homeowner who's making his or her payment each month.
It's the responsible, solvent homeowners who deserve the help, if any goes around. Those are the homeowners who need to be kept in their homes, not the ones who have already shown through inability or unwillingness to keep up with mortgage payments.