Rick Smith Associate Broker, COO

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Will Federal Down-Payment Protection Stimulate Housing?

There is a strong case for a federal down-payment protection program. It would almost certainly help rejuvenate a moribund housing market resulting from the hesitancy of potential homeowners to invest in a new home, apprehensive that prices will decline. Here’s how it could work. Homebuyers could insure their homes with a one-time protection fee they would purchase from the government for a nominal sum.  Hypothetically this could be 1 percent of the house purchase price which could vary according to the risk of price decline in the area. At the end of a three-year period the government would automatically pay protected homeowners if the average house prices in their area have dropped since they purchased their homes. If there’s no decline there’s no payment. Alternatively payment might go toward the mortgage to reduce the mortgage amount due. Declines could be based on house-price-indexes. The outcome will be that homeowners are automatically compensated at the end of three years for loss of equity to the extent of their down payment without selling their homes. A program like this would stimulate the housing market because lenders would be inclined to ease current tight credit conditions. There are various other spin-offs which could ensue from such a program which will embolden lenders to ease up on mortgage terms.

Rick Smith is a Bay Area realtor with a special expertise in helping people reeling under notice of foreclosure. Short sale is one preferable alternative which he advocates. Rick Smith knows lenders and their operating procedures which is why he has a high success rate in short sale negotiations. Click on http://buyshortsalehomes.net to know what your foreclosure options are.