Here’s Dean Baker’s solution - quick and to the point.
Here’s why Dean Baker is against a bailout of a type that [is] most often discussed.
It’s very much worth a read.
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Here’s Dean Baker’s solution - quick and to the point.
Here’s why Dean Baker is against a bailout of a type that [is] most often discussed.
It’s very much worth a read.
Comments 3
Seems like the prospect of becoming a long-term landlord might give the lender some incentive to work out terms to prevent forclosure.
Posted 29 Mar 2008 at 9:31 am ¶Hi David,
I agree. It certainly would seem to put pressure there since lender’s would stand to risk losing a lot. It actually would help stabilize housing prices too - which is both to the lenders and remaining house owners benefits - so it’s not all zero sum either.
Posted 30 Mar 2008 at 4:26 pm ¶I think Baker’s numbers are suspect. Most likely, he is comparing an average rent for a much lower quality dwelling. I haven’t dealt much in real estate, but I expect that the average investor in rental real estate would want it to pay out in 15 years, not 30 and, because it is an investment loan, might well have to pay a higher interest rate. Therefore, the monthly cost would be higher, not lower. In the example he cites, taxes alone would eat up half of the proposed rental rate.
It is creative thinking and might apply in a few cases, but would likely not work in general. Beyond the improbability of the numbers, what incentive would the new landlord have to do any maintenance?
A system that caps interest rates at perhaps an overall average might work better for those who genuinely could afford to live in their chosen house.
Best regards,
Byron Miller
Posted 31 Mar 2008 at 9:20 pm ¶Post a Comment