The housing market continues to dominate the news. This week the Countrywide problem appears to be just that, C-o-u-n-t-r-y-w-i-d-e. From coast to coast the problem just keeps growing. Looks like you will soon be making your monthly mortgage payment to Bank of America.

Hillary Clinton also popped into town to unveil her economic stimulus program and what a magnificent state to do it in. Record foreclosures that are outpaced only by the number of electoral votes. She is proposing a $30 Billion Emergency Housing Fund. Her plan would give money to states, cities and communities to help prevent what her website calls “unnecessary foreclosures”. If I remember what I learned in real estate school, there is no such thing as an “unnecessary foreclosure”. You don’t pay your mortgage you face foreclosure, if you don’t make your car payment you face repossession, if you walk out of Target with a cart full of merchandise and don’t pay, you face going to jail. Undesirable, yes. Uncomfortable, probably so. But unnecessary, I don’t think so. I know, its tough being an adult.

 Anyway the problem this presents is putting money and responsibility in the hands of government, it’s not needed. There are some policies that would be very easy to implement and administer if we could just get past this idea that government programs are our sole salvation.

The up2daterealestate Stimulus Proposal

I have come up with some ideas and no matter how many times I add them up, I can’t even come close to $30 Billion.

1. Increase the Conforming Loan Limit – this currently stands at $417,000, however Alaska and Hawaii have higher limits posted at $625,000. California should be categorized as a higher limit state.
2. Allow access to IRA Accounts – people should be allowed to make withdrawals from either a IRA or SEP account without having to pay a penalty or tax. A few bad days in the stock market can wipe out a years worth of gains. Allowing unfettered access provides a much needed individual stimulus without having to rely on government.
3. Modify Flexible Spending Accounts – these programs should only apply towards medical costs, they should be adapted to include financial hardship
4. Allow Deductibility of a Loss on a Personal Residence – If we allow homeowners to deduct up to $500,000 in capital gains on the sale of a personal residence, then we should also allow homeowners who sale their home for less than they paid the opportunity to deduct the loss on their income tax.

I also happen to think this program is fair. It allows individuals to address their specific problem. It does not reward a careless action with taxpayer money. I would love to live in Beverly Hills, except I cannot afford it. If I had bought a house in the 90210 zip code, should the taxpayers pick up my tab for supporting a lifestyle which I cannot afford, simply because it would have slipped into foreclosure?

Tags: Foreclosure, Hillary-s Stimulus Proposal, housing market