High inflation. High interest rates. Sluggish housing market. These are terms I grew up with living in Michigan all my life.
I remember the recession of the early 1980’s when you couldn’t buy your way into a job. I remember 101/2 % interest rates in the early 1990’s when my husband and I were first time home buyers.
I remember FHA and MISH-DA loans that were government funded and lower in interest.
With banks already needing to tap into government resources that haven’t been used much since the 1930’s, we are seeing and going to see more New Deal measures revived and pressed into service.
The New Deal was Roosevelt’s emergency called into practice. FDR instituted programs to Throughout my 40+ years, however, I have never heard the terms I am hearing now. Terms we only hear in history books.
The FHA is considering the New Deal reform concept of government purchases mortgage loans from banks, lending institutions and mortgage companies. The loans would be owned by the government who would then offer them back to consumers at lower interest rates.
Banks are feeling the pinch from investments which have plummeting in value, as well as from foreclosed homes sold to people who can no longer afford their mortgage payments.
Mortgage companies cannot afford to offer the lower interest rates and remain in business. As the housing situation stands now, many lending companies are struggling with loans that are worth more than the value of the home or property.
Homeowners are faced with increasingly expensive housing and living costs and therefore are finding it difficult to make the mortgage payments.
The cost in terms of tax dollars would be somewhat expensive. for those who are already struggling with the depressed economy, added tax burden is not appealing. Some folks did not fall for the temptation to purchase a home in the higher range of mortgage, but chose to buy a home at the lesser loan amount.
They put up with some inconveniences of a less expensive home: the endless repairs, the constant in process remodeling job, etc. Many of those people do not want extra tax dollars levied to bail out those who chose the pricier homes but could not afford them.
Congress is considering this as an emergency measure. What will actually happen is still not completely clear.