Obama will travel to Phoenix Wednesday to announce a 50 Billion Dollar plan to "fix" the Mortgage crisis and find a"bottom" to the real estate market as Fannie "dumps" property for under a thousand dollars! You can go to any major city and search the local listing service and at the low end of the listing you will find dozens , hundreds in some markets,of Fannie,Freddie and HUD foreclosures often priced for a few hundred dollars, well below the value of a vacant lot!
Fannie and Freddie have both "suspended" foreclosures but are now dumping properties at record rates. Most of these homes are in middle and working class neighborhoods that already have problems. When one of these properties is "dumped" at such a low price it brings down property values for the entire neighborhood. These properties are often purchased by investors who may sit on them for months or years "betting" on some market turnaround. Seldom are the yards mowed or the homes maintained.
These homes are equally problematic for local governments who rely on property tax assessments which are often tied to the sales price of a properties. These homes often provide an appeal bases for other property owners to successfully reduce their property taxes and further reduce the tax base of the community. Many cities are now forced to cut back on essential services due to the shrinking tax revenues caused by this "wholesale dumping" of properties.
Just having a 'dumped " Fannie foreclosure can make your home impossible to sell or if you do find a buyer, it is problematic to get an appraisal high enough to justify a loan. Appraisals rely heavily on 'closed sales" to come to a market value. A large quantity of home actually sold now are foreclosures. One or two in a neighborhood can drag down property values an additional 40-60 percent.
Even in Pheonix, where Obama plans to announce his "grand 50 billion dollar plan" a check of the local MLS revealed dozens of Fannie,Freddie and HUD foreclosures and yes I found a 4 bedroom house for sale for 500.00!
Obama's plan does nothing to stop Fannie , Freddie and HUD from dumping property on trhe market. If he expects to find a "real bottom" then he needs a moratorium on those agency's dumping property for 6 months. A comprehensive plan should provide a means for those foreclosed properties to be fixed up, perhaps given to technical schools for a building trades program, or even repairs and maintenance done by Americorps.
No housing plan will be successful until Obama fixes a root cause. Taxpayer funded government agencies engaged in the wholesale 'dumping" of property.
That will be step in the right direction and any proposal that does not regulate those agencies should be voted down by congress.