More Housing Problems
Threatening America's Financial Solvency

Recent government plans for FHA to refinance home loans for people in foreclosure have serious problems that will add still more financial chaos in the housing and financial markets, and add to the debt of the American taxpayers. Here is one of the problems, and directly related to the so-called bailout of home owners threatened with foreclosure:

• The homeowners facing, or in, foreclosure, which the government plans to bail out by  paying off the existing loan and allowing the homeowner to now make the mortgage payment to the government lending agency.
   
• of dollars less, sometimes several hundred thousand less. The taxpayers, the youth who have not paid any attention to these matters, will end up saddled with these debts. 
   
• The refinanced home loans are guaranteed by the government, which means that if these refinanced home loans become delinquent, the U.S. government―you the taxpayer―will be stuck with the bills. And this can easily go into the billions of dollars. That is "b" as in billions.
   
• That proposal bails out the lenders that made loans on over-valued houses. They are the only ones sure to benefit from the government refinancing.
   
• That homeowner will have no equity in the house, as the new loan balance will equal or exceed the declining property value.
   
• If the value of that refinanced house decrease, as they have been doing, by 10, 20 or more percent, the newly refinanced mortgage will soon be more than the value of the homes.
   
• If, or when, this occurs, many of the people with the new mortgages will simply walk away from them. Especially when they see the identical and nearby houses selling for thousands

Declining Market Value of Houses
Brings About More Foreclosures

The escalating foreclosure on home loans that were made to subprime or alt-prime buyers brought about another form of foreclosures. Home owners with declining home values decided to simply walk away from their home loans and purchased, often identical homes, and often in the same areas, that due to prior foreclosure were available at much lower prices, sometimes hundreds of thousands of dollars, and sometimes having mortgages halt the amount of their existing ones.

Ditch and Buy―Forerunner of What Will Happen

In 2008, a practice developed, presaging what is going to worsen the housing debacle. People in homes where the market values have dropped below the value of the mortgages, simply walked away. But before they did, they often purchased previously foreclosed houses, similar to theirs, at tens of thousands or hundreds of thousands less. And this was often done with little or no money down.

Just when people thought the real estate debacle couldn't get any worse, they got worse.