The California Deleveraging Boom
The terrible California housing market suddenly isn’t so terrible after all, depending on how you look at it. Home resales have soared, which is good. Home prices have plunged – a natural result of foreclosures and short sales. In other words, the nation’s largest housing market is deleveraging itself quite handily with little government help. Not that the government isn’t involved, having already taken action to make FHA, Fannie Mae, and Freddie Mac loans readily available to buyers who qualify under new and more sustainable standards.
So what more should the government do? U.S. Treasury Secretary Timothy Geithner’s plan to help homeowners is months from being useful. Maybe he should just forget it.
The best thing Congress could do at this point for the housing market might be to help mortage modifications by giving some protection to loan servicers, which currently do not have a liability shield against investors. Congress could pass a law protecting mortgage security servicers from lawsuits, giving them the freedom to negotiate new terms with borrowers, allowing more people to keep their homes
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