Fred Zelenski
Lambertville
Dragged down by such anchors as a bulging pipeline of foreclosures and a dearth of buyers, it will be many more years before a housing-market rebound takes hold. Some say it will take another 10 years or more before values return to prerecession levels.
Symptoms of the limping U.S. economy with lots of downside risk strangled by an unemployment rate above 8 percent will continue to keep buyers scarce.
Meanwhile, the massive number of foreclosed properties on the market — more than a quarter of U.S. residential sales — keeps pushing prices down. That, in turn, has driven more homeowners into negative equity, further scaring prospective buyers and making new homes much more expensive by comparison. Why would you buy a property at today’s prices when the real market for housing is at a fraction of the prices most sellers are hoping for? Some say the real valuations of homes are at 2000 levels.
But the economic geniuses in Washington, including our president, want another “fix.” The Obama administration has announced that the Federal Housing Administration — which insures about one-third of all new mortgages — will slash fees for qualified borrowers who refinance their loans.
That will save up to 3M homeowners who refinance their mortgages about $1,000 annually, according to President Barack Obama. And that’s better, he says, than sitting by and waiting for the housing market to hit bottom — a bottom that has yet to occur. But the FHA itself has bottomed out and is off Mr. Obama’s teleprompter. The FHA, based on its last annual report, has about $2.6 billion to cover possible losses in its $1.1 trillion mortgage portfolio. Last year, the agency’s capital dropped by $2.1 billion. A sorry state of affairs.
FHA officials optimistically predict that a housing-market rebound will keep it afloat. A rebound that most experts say is about five or more years away. Realistic mortgage experts say the agency has seriously underestimated its risk.
Future FHA losses, coupled with the reduced fees, could tap taxpayers hard. The FHA’s own report predicts a 50 percent chance that the agency will need up to a $43 billion bailout, possibly by next year, reports David C. John of The Heritage Foundation.
The last thing the nation’s troubled housing market needs, and what taxpayers cannot afford, is more federal tinkering where Washington has no business. And we certainly cannot afford $43 billion to bail out more of the bankrupt portfolio of mortgagees who are waiting for a government handout. Aren’t the financial institutions that got us into this quicksand the ones who should be footing the bill here?

