American Property Market Still Struggling, but Bailout Looks Unlikely
08 September 2011
The American property market is still in the doldrums as the US economy struggles to recover. Many people are now asking for another federal housing bailout, but according to the experts the administration cannot agree on this huge issue.
The most likely result is another round of refinancing options which is easy to implement with no new legislation being required. However, this is likely to be largely ineffective for those Americans whose mortgages are already in trouble. There have already been several refinancing programs, and these haven't proved to be much help for people in need.
It looks likely that the current refinancing programs could be expanded. This could include eliminating all the lender fees and allowing delinquent borrowers to benefit from the program, but experts are sceptical about the effect this would have. They point out that homeowners who have refinanced under the current programs tended to have loan to values in the 80% to 105% range, and only a very few had loan to values in the 105% to 125% range -- most people who have this much negative equity are unlikely to be interested in refinancing.
Experts also point out that unless the lenders can gain significant fees through refinancing, they are unlikely to be interested in such a program. Then there's the problem of deciding who will be eligible to refinance, as the basic idea behind this is that it not only helps the housing market, but also helps the economy by giving consumers more money to spend. When you consider how many of these homeowners may be facing job uncertainty, encouraging them to spend more seems highly impractical.