{"id":345,"date":"2011-10-27T07:02:11","date_gmt":"2011-10-27T11:02:11","guid":{"rendered":"http:\/\/dankrell.com\/blog\/?p=345"},"modified":"2019-08-02T06:49:25","modified_gmt":"2019-08-02T10:49:25","slug":"the-housing-solution-trap","status":"publish","type":"post","link":"https:\/\/dankrell.com\/blog\/2011\/10\/27\/the-housing-solution-trap\/","title":{"rendered":"The housing solution trap"},"content":{"rendered":"\n
\"\"<\/a><\/figure><\/div>\n\n\n\n

When we\u2019re feeling pain or anguish, immediate relief is often sought. So, it would make sense that, when we\u2019re feeling pinched financially, a short term money fix might help. However, quick fixes don\u2019t always address the underlying issues that precipitated or contribute to the problem.<\/p>\n\n\n\n

According to recent reports, Americans are increasingly \u201cfeeling\u201d the pain as the economy continues to stagger amid volatile financial markets and gloomy housing reports. The Misery Index, which can be construed as a quantitative measure of \u201cpain\u201d associated with an economy, was recently reported to have risen to its highest levels in 28 years. (Introduced in the 1960\u2019s, the Misery Index is found by adding the unemployment rate to the rate of inflation. Obviously, the lower the index – the better.)<\/p>\n\n\n\n

So it should come as no surprise that as the push for a jobs bill continues the focus has once again turned to the housing market. This week, the Federal Housing Finance Agency (FHFA.gov) announced that the Home Affordable Refinance Program (HARP) will be \u201cenhanced\u201d to accommodate more under-water home owners.<\/p>\n\n\n\n

When the program was initiated in 2009, the intention was to assist the refinancing of home owners whose home values declined. It was estimated that it would assist millions of home owners. However, as has been widely reported recently, only about 900,000 home owners have been helped; and of those home owners, about 72,000 are under-water.<\/p>\n\n\n\n

Seeking immediate relief for home owners, HARP\u2019s eligibility requirements have become the center of attention. This week\u2019s announcement to remove the \u201cimpediments\u201d to refinancing is expected to increase the pool of home owners seeking refinancing of underwater mortgages.<\/p>\n\n\n\n

HARP\u2019s initial eligibility requirements included: having a mortgage guaranteed by Fannie Mar or Freddie Mac; the mortgage must not be an FHA, VA, or USDA loan; mortgage payments are current and payments must not have been more than 30 days late in the last year; the first mortgage amount must not exceed 125% of the home\u2019s value; the refinance should improve the long-term affordability of the mortgage; and you\u2019re able to make the new payments.<\/p>\n\n\n\n

The new HARP guidelines announced by FHFA this week include lowering or eliminating certain borrower fees, removing the 125% loan to value ceiling, and extending the program to December 31, 2013.<\/p>\n\n\n\n

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In addition to helping already stressed home owners, it is expected that the money saved on mortgages will be pumped back into the economy. However, critics say that the revised guidelines will do little, if anything, to address the wider problem that exists in the housing market. Additionally, some critics point to the added burden on an already troubled Fannie Mae and Freddie Mac.<\/p>\n\n\n\n

So, if the recent adjustment to HARP won\u2019t do much for the housing market, as critics point out; what is the solution? Short term fixes may immediately reduce the pain. However, there should be little doubt that housing and employment are closely linked. Aside from monetary policy that might focus on flattening inflation; addressing long term sustainable economic growth, along with an expansion of permanent full time employment is the key to reviving the housing market.<\/p>\n\n\n\n

Nothing feels better than taking pain away quickly and effortlessly. However, like many deep seated problems, the solution may very well lie in a long term plan that may require feeling some pain along the way.<\/p>\n\n\n\n

by Dan Krell
\u00a9 2011<\/p>\n\n\n\n

This article is not intended to provide nor should it be relied upon for legal and financial advice.\u00a0 Using this article without permission is a violation of copyright laws. <\/p>\n","protected":false},"excerpt":{"rendered":"

When we\u2019re feeling pain or anguish, immediate relief is often sought. So, it would make sense that, when we\u2019re feeling pinched financially, a short term money fix might help. However, quick fixes don\u2019t always address the underlying issues that precipitated or contribute to the problem. According to recent reports, Americans are increasingly \u201cfeeling\u201d the pain … <\/p>\n

Continue reading “The housing solution trap”<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":false,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2}},"categories":[166,458,288,55,13,398],"tags":[846,881,847,932,459],"class_list":["post-345","post","type-post","status-publish","format-standard","hentry","category-fhfa","category-harp","category-housing-market","category-mortgage","category-real-estate","category-refinance","tag-fannie-mae","tag-fhfa","tag-freddie-mac","tag-harp","tag-mortgage-refinance"],"jetpack_publicize_connections":[],"jetpack_featured_media_url":"","jetpack_shortlink":"https:\/\/wp.me\/p1VZLf-5z","jetpack-related-posts":[],"jetpack_sharing_enabled":true,"jetpack_likes_enabled":true,"_links":{"self":[{"href":"https:\/\/dankrell.com\/blog\/wp-json\/wp\/v2\/posts\/345","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/dankrell.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/dankrell.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/dankrell.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/dankrell.com\/blog\/wp-json\/wp\/v2\/comments?post=345"}],"version-history":[{"count":9,"href":"https:\/\/dankrell.com\/blog\/wp-json\/wp\/v2\/posts\/345\/revisions"}],"predecessor-version":[{"id":5431,"href":"https:\/\/dankrell.com\/blog\/wp-json\/wp\/v2\/posts\/345\/revisions\/5431"}],"wp:attachment":[{"href":"https:\/\/dankrell.com\/blog\/wp-json\/wp\/v2\/media?parent=345"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/dankrell.com\/blog\/wp-json\/wp\/v2\/categories?post=345"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/dankrell.com\/blog\/wp-json\/wp\/v2\/tags?post=345"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}