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Bay Area Real Estate: Do you agree with principal reductions?

  
  
  

Do you favor principal reductions, or are you against this government real estate "bailout"?  Recent data shows that the real estate market is showing positive signs of coming back, however, some say that the slightest down trend in any area of real estate could possibly cause the market to tank again.  And if principal reductions are going to keep homeowners from losing their homes, then this will help keep foreclosure statistics from climbing back up.  The question is, at what cost?

 

 

principal reduction

 

In California, the "Keep Your Home California" principal reduction program, can assist eligible homeowners to reduce their principal up to $100k in assistance from this program.  However, in the end, someone has to foot the bill.  In the cases of these government principal reduction programs, tax dollars are set aside to assist in paying the lenders the offset in principal owned by the borrower.

 

That's where the line is drawn for both sides: Should taxpayers have to pay for part of a homeowner's mortgage?  Should we help our fellow citizens for the greater good to avoid another housing crisis, which can possibly cause the economy to go into another recession?

 

Some homeowners feel morally obligated to their original loan amount, that what they said they're going to pay, that that's what they should pay off.  And not only those homeowners, but some taxpayers who feel the same way, that those homeowners who take on those loans should be obligated to pay the original amount.

 

However, there are those that say to avoid another housing crisis, we should use all options to keep the housing market afloat.  They say the use of taxpayer dollars towards debt reduction is good overall for the U.S. economy.  The naysayers say that many taxpayers are struggling with their own rent or mortgage, and for whatever reason will not qualify for debt reduction, and argue that why should their tax dollars be used for someone else's rent, when they can't pay their own rent.

 

What are your thoughts?  How do you stand on this issue? Are you for principal reductions? Or are you against it?  Post your reply on our blog! And as always...

 

Have a great Real Estate day!

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