Steve Harney Discusses the New FHA Short Refinance Option
Walking Away: New FHA Short Refinance Option
The current administration continues to attempt a myriad of policies aimed at bringing about a recovery in the housing industry. It is not their belief in the importance of homeownership that drives this policy. This administration has openly questioned whether the government should continue to support homeownership as an American ideal. Every policy had one purpose in mind: that stabilizing home prices would help stabilize the economy.
The purpose of the original stimulus package (the homebuyers’ tax credits, the lowering of interest rates by purchasing mortgage-back-securities, different modification programs) was to stabilize housing prices. It had nothing to do with getting families into homes or keeping families in their current homes. The government realized very early on that a recovery in housing would require a stabilization of values. Why? Because a large percentage of homeowners ‘walk away’ from their homes once they fall into a negative equity situation (where their home is worth less than the mortgage on the home). That would create more foreclosures and continue the cycle below:
