De railed Stimulus for Housing Crisis

Have you read the almost final version of the Stimulus Bill? For all the anxious people who bought a house last year, OMG the burden on your heads - 39 billion may not be coming your way. Why is this bad news? The provision of $ 39 billion for a tax credit for home buyers is largely a windfall for people prepared to buy a home anyway. This does not encourage people to buy a house or who just fall short of making down payment for the house. The main goals of the stimulus should have been

 

1. To help people retain their home by relieving them of paying their monthly installment if they had lost their job until they get a new job. This will encourage people to repay the amount with interest because once they get the job. By asking them to pay the mortgage payment when they have no job, is clearly moving towards foreclosure and more toxic assets.
2. Tax credit should have been given to people who buy Foreclosed / Bank held homes for renovation. The reason why people are not buying foreclosed homes is that they do not have the money for renovation. This will not only promote sale of foreclosed homes but give jobs to many people in the construction industry and retailers.
3. Tax credit should be given to First time home buyers by assisting them in initial payment. This will help people who do not have enough money for down payment and will reduce the number of available houses in the market.
4. Tax credit or loan adjustment should be made for people whose home value has been considerably lost because of foreclosures in the neighborhood.

 

To get consumer confidence and increase spending, people should have job security and believe that the world is full of opportunities. To get this confidence the layoff trend should stop. Even if hiring is in slow pace and there should be no lay offs, people will feel that the situation is improving and start making investments.