The wizard of D.C. to the rescue
In case anybody hasn’t noticed, the housing market in this state stinks. Mitt Romney noticed, and on a recent swing through Southern Nevada, he uttered the now famous words: “[D]on’t try and stop the foreclosure process. Let it run its course and hit bottom. Allow investors to buy homes, put renters in them, fix the homes up, and let it turn around and come back up.”
Not his most sensitive moment, to be sure, but he makes a good point. The crisis isn’t over, and it’s going to take a bit longer for the markets in Nevada to equalize. Regardless of what anybody thinks, if people can’t pay their mortgages, they can’t pay their mortgages. They shouldn’t be allowed to stay in these homes forever without means to pay for them, and the market will not show any signs of life until the foreclosures work their way out of the system. Only then can we start to rebuild out of the Spanish tiled, stuccoed mess that is the burned out husk of the Nevada housing economy.
President Barack Obama noticed as well, and I doubt it’s a coincidence that on a recent fundraising swing through Nevada, he decided to unfurl his new plan to meddle in the housing markets. If one believes his lofty rhetoric, this single measure is going to prevent foreclosures, breathe life into our cratered markets, create jobs, revitalize the economy, and I’m pretty sure he mentioned something about ending world hunger and bringing back the hula hoop.
Pity it’s going to do none of these things. The Home Affordable Refinance Program, or HARP, has been hyped as a savior, but the devil is in the many details. Only mortgages held by Fannie Mae and Freddie Mac are eligible, and only those who are current on their payments can qualify. This does nothing to help those whose credit has been destroyed, those who have diminished or nonexistent incomes, or those who want to come to an equitable solution that doesn’t include keeping the house. A rare bright note is that people who choose to enroll in this program will see elimination or lowering of fees, appraisals and closing costs.
Unfortunately, if your mortgage is through a regular bank or if you’re already behind on your payments, then too bad so sad. No help for you.
Regardless of what the Democrats tell you; this new program will not halt the foreclosure process. Those who are already in foreclosure will receive no assistance. Those who refinance in this new HARP program can still go into foreclosure if they lose their means to make the payments or just stop making them of their own accord. On top of that, those who qualify for this program are faced with a rough decision. They can reduce their monthly payment substantially, but this proposal will not adjust the inflated value of the home. The HARP ‘solution’ to the high mortgage payments is to re-amortize a 30-year mortgage, apply the savings to the original principal or refinance to a shorter 15-year term. This program does nothing to address the grossly overinflated values, it will just buy you a lot more years to pay it back.
All show and no go. Perhaps this is why Obama wasn’t greeted with throngs of supporters when Air Force One landed at McCarran Airport. A solitary Carolyn Goodman, current mayor of Las Vegas and wife of former mayor Oscar Goodman, stood there, phone in hand, to greet him. A departure from other visits, to say the least.
Nevada is in the pantheon of states that will decide the next election, and as Obama’s numbers continue to implode, our six electoral votes become more and more important. He came, he spoke, and with all the fanfare we experienced in 2008, he still implores us to pay no attention to the man behind the curtain.