As Congressional leaders are meeting at this moment creating a rescue plan for the current economic crisis, the views and opinions are as varied as the number of people involved in the process. Hopefully, there will be some concrete plans in place by the end of the weekend.
There are numerous questions that need to be asked about this legislation that it seems no one is asking or answering. The recurring theme in this proposed plan is that the Federal Government (you and me) is going to buy out all of these mortgage securities.
Question #1 – What happens to all the real property (homes) that are tied to these mortgage securities? Do the banks relinquish these properties to the Feds and they now become owned by the Feds? In one of his speeches this week, President Bush indicated that the Feds would hold these properties until the market turns. So what are we talking about? 6 months, a year, two years or more? Fact is no one knows so we are going to allow whatever entity the government sets up to administer this monstrosity to hold these properties for an indefinite period of time? Things that make you go “hmmmm….”
Question #2 – How are they going to dispose of these distressed properties? What regulatory nightmare is going to be created in the process? More bureaucracy and costs, possibly less reimbursement for the provider of the services, i.e. REALTORS(TM) if healthcare and other government programs are any indication.
Question #3 – Who is going to maintain the properties while the government waits for the market to turn? HOA’s? That will put additional burden on the taxpayers and homeowners because the HOA’s will not be able handle these without raising their fees. Yet if they don’t, the junky homes, overgrown yards and algae filled pools will draw property values down further defeating one of the purposes of the legislation!
Oh well, I guess we’ll know before too long. However, don’t forget the only place the Federal Government has to get money is to print it, borrow it, or take it from the taxpayer. I sure hope we get a good return on our investment. That’d be free enterprise socialism at it’s best.