Reply #5: In some worlds that might be possible, but given that even today [View All]

a lot of people in rent-to-own contracts don't keep up with the home repairs (in my experience with a number of these) I think the chances are low.

But even if they do, there are much deeper issues than that. Nothing in this proposal says they get the house back, and even if they do, who is going to foot the bill for making it cheaper? The money that is owed right now very likely came from a pension fund, maybe for teachers or firefighters. They will lose some of their retirement to fund this idea, 'cause their loans will have to be rewritten. How much should people give up of their retirement so other people can keep overpriced homes? Otherwise you still have the same overpriced house after 5 years, and it crashes then.

And when the loan values go down on these homes it is going to take the values down around it. And that is going to cost other people their homes.

The last chart I saw showed about 4-5 trillion dollars in extra debt on the housing market, over and above the actual value of the market. That's the price tag for fixing this. And no one seems willing to go out on the hook for such sums. Would it be worth taking social security away from some people to do this? Because with the current political climate that is a distinct possibility. That money would have to be made up somewhere - with far less in taxes being paid in, where does that come from? If you do this while the larger economy is spinning apart, it will just add more damage.

Foreclosure may not be a happy thing, but it might be the best thing. They move into an apartment. Then the home prices drop to the less-inflated level they should be at, and they can be repurchased a few years from now when some of the unemployed people have died off because they couldn't get their social security in time.