It's not just the UK government that is desperately trying to prop up house prices at the taxpayer's expense. Here's what our American cousins are up to, from FT Alphaville:
Under the profit-sharing part of the Housing and Economic Recovery Act of 2008, homeowners at risk of foreclosure could refinance their mortgages via the Federal Housing Administration "at a signficant discount". In exchange they had to share future appreciation in the value of their homes with the FHA.
This, perhaps unsurprisingly, was a stumbling block for applicants, who weren’t happy at the prospect of 'sharing' profit (sharing losses with the taxpayer was, presumably, fine). Eliminating the profit-sharing scheme altogether consequently results in, as BoA’s Rosenberg, describes it:
"…a major shift towards making the program more attractive from the borrower’s perspective at the taxpayer’s expense."
Bail-out indeed. Pity the non-mortgage owning Americans.
Via OTOH at HPC.
It Makes No Difference
1 hour ago
4 comments:
"STUMBLING BLOCK" But if you need it, you need it and you'd be grateful. If you don't need it then stay as yuo are and risk living in a trailer.
Also from the original article..
"We’d note also, that the issue of the Hope for Homeowners programme was something Michael Lewis and David Einhorn picked up in their New York Times op-ed last week. The programme, meant to aid some 400,000 homeowners in the States in danger of foreclosure, had seen only 312 applications as of December."
A bit background-ish but on the ball is Robert Skidelsky in his review of Niall Ferguson's "The Ascent of Money" in current New York Review of Books 15.i.09.
"The spread of homeownership in the twentieth century" (was) "largely promoted by government to make capitalism more popular".More popular alright but less and less efficient.See> Andrew Oswald's research that shows that places with high proportions of homeownership have higher unemployment.
DBC, there are three different groups with different levels of mobility - council tenants who are pretty much stuck where they are (tenancies for life, and all that); private tenants (if we ignore the monstrosity that is Housing Benefit for private tenants) and home-owners (again, tend to be immobile).
So this is a question of self-selection - if there are more jobs in an area, the first to arrive (and the first to leave if those jobs cease) will be private tenants. Home-owners tend to hang on for longer (more likely to be in negative equity if local employers shut down) and the council tenants who are stuck where they are.
So that statement, assuming it to be true, is confusing cause and effect.
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