Housing Recovery Plans or Happy Accidents?


The hubbub in the news this past week is that Obama’s fiscal year budget for 2013 includes an extension of the Mortgage Forgiveness Debt Relief Act of 2007 all the way through 2015. (Note that this has not been set in stone yet, it’s just a proposed budget.) The Mortgage Forgiveness Debt Relief Act of 2007 allows for tax relief under certain circumstances to sellers whose homes are sold in a short sale.

As a short sale aficionado, I’m not sure what to think of this proposed extension. On the one hand, our economic recovery has been deplorably slow and it may take more than just three more years to get the shadow inventory of short sales off the books, so to speak. On the other hand, do the constantly new and changing Treasury-level panacea offer an appropriate to solution to the troubles currently plaguing the real estate market?

Over the last three years, the Obama Administration has offered the following solutions: HAMP (Home Affordable Modification Program), HAFA (Home Affordable Foreclosure Alternatives), and HARP (Home Affordable Refinance Program). And, while each of these programs has helped thousands of homeowners, it has just not been enough. Additionally, many of the lending institutions have begun to offer short sale incentive programs in order to get borrowers motivated to sell their homes as short sales. In fact, one major lending institution is offering certain short sale sellers as much as $35,000 or $40,000.

Yet, despite the fact that there are so many programs available to short sale sellers, the recovery continues to be slow. I’m beginning to wonder whether this was an intentional plan or a happy accident.

What say you?

(photo credit)

About Author

Melissa Zavala is the Broker/Owner of Broadpoint Properties and Head Honcho of Short Sale Expeditor®. Before landing real estate, she had careers in education and publishing. Many folks say that Melissa is genetically pre-disposed to success with short sales. In fact, last year she and her staff obtained over 500 short sale approval letters! When she isn’t speaking with lien holders, Melissa enjoys practicing yoga, walking the dog, and vacationing at beach resorts.


  1. Melissa
    I am skeptical of the efficiency of any government program to help underwater homeowners and the real estate market in general.
    1. While housing is a big segment of the economy, economy and jobs drive the housing market (not the other way around). The key to recovery in the housing market is jobs and personal income. If and when unemployment drops to 6% or so, the housing market will recover.
    2. In my mind, there is little sense in keeping people in homes purchased at artificially high prices. These artificially high prices were caused in large part by loose lending standards where credit income and downpayments were ignored.
    On the SF Peninsula where we work, the areas east of highway 101 have seen property values cut in half due to subprime lending and the resulting wave of foreclosures and short sales. I believe it will be a long time if ever until values return in these areas to the peak in 2007.
    At the end of the day, the taxpayers will be on the hook for these loses. Why drag out the pain and increase long term cost to the taxpayers?

  2. Hi Melissa:

    It’s way too soon to lose any sleep over the administration’s 2013 budget. Here’s why:
    1. The GOP controls the House, which controls the Federal purse strings. Whaever the Obama Administration proposes you can bet the ranch it won’t be recognizable when it leaves the Hill.
    2. There’s a reasonable chance the Obama Adminstration won’t be in office four monts after FY 2013 begins. Its budget immeidately ends up in the shredder.
    3. Congress hasn’t actually passed a budget in several years. The government has been operating by continuing resolutions.
    Since 2011, the Administration has had a reduction of the mortgage interest deduction in its budget. There’s been hardly a peep from the homeowning majority because it will never see the light of day.

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