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Could This Approach Help Stabilise The Us Property Market?

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I came across this: http://www.onereallygoodagent.com/proposal.htm in another forum but have scrambled my tired brain trying to see if it would actually be feasible.

It relates to the US housing market.

I can't decide if it would have any merit for banks (as in minimising losses and improving liquidity) or if it would only temporarily (given the current plunging market) benefit homeowners who are currently sliding into negative equity (probably by having bought at the peak or withdrawing equity).

Would it actually help to stabilise/mobilise the property market? Or is it all smoke & mirrors????

The proposal seems to be have been inspired (if that's the right word) by the new wave of foreclosures that are forecast here in the States - being those that are able to meet their mortgage payments but are deciding that it would make more financial sense to default and to hell with their credit rating - because they are now seeing paper losses and forsee only deepening losses ahead :huh:

My personal gut feeling is that markets should be allowed to run their natural course without external interference - but I am no economics expert!!!!!!

Perhaps some sharper minds than mine who are more familiar with the way banks operate could offer some opinions as to whether this scheme might or might not be feasible?

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This is equivalent to lenders reducing the value of mortgagesto match the value of the borrowers' houses. Not original, just a more convoluted way of doing the same thing.

A lot of people are suggesting this and US politicians are pushing for it but banks are resisting this move.

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  • 284 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?

      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%

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