“No it’s not.
It gives the market time to work. Many of these people will get a little time to get refinanced or sell the homes.
It will stabilize the housing market which will be good for everyone.”
Most of the market did not buy homes in the last 3-4 years and a large percent that did buy didn’t use these BS loans. This “plan” does nothing for most of the market. It does reward risky behavior on both the borrower and lender sides.
There is a big difference between stablizing the market and proping the market up. I believe this long term is more destablizing. Letting the chips fall and allowing investors to buy the foreclosed homes is painful, but necessary to clean it up. Similar to the savings and loan crisis and aftermath.
I don’t see another Ronald Reagan/Paul Volker out there that will be capable of cleaning up this mess in the making in 2016.
In the same breath, you say that “most people didn’t use these loans” (true) and that it’s a “mess.”
If most people aren’t in a situation where this policy will affect them, then it’s not a “mess” at all and is a small part of the entire market.
It’ll help a few people and smooth things out, nothing more. For that matter, I would say just leaving it be would be better, but the pragmatic side of me knows that politically, something had to be done, and I’d rather it be this than a taxpayer-funded bailout.
A plan that keeps large numbers of foreclosed homes from being dumped on the market is a good thing.
Everyone is affected if housing prices have a significant decrease.
And individual risky behavior isn’t being rewarded, it is more like a bad situation doesn’t turn into a catastrophic one.
Don’t forget that the active housing market has pumped huge amounts of wealth into our economy.
Everyone benefits from this.