GuardHill Financial Corp. is a prominent residential mortgage company in New York that recently expanded in New Canaan. Why do you see Connecticut as a good place to grow?
GuardHill is expanding into Connecticut due to the extraordinary opportunities that the market place affords us. Banks have scaled back their mortgage origination platforms and many brokers have gone out of business. GuardHill is filling the void that the Connecticut marketplace desperately needs.
Will President Obama’s mortgage rescue plan really help stem the housing crisis in the U.S.?
The objective of the plan is to stem foreclosures, which will stabilize real estate prices, But there are better ways to spend our $75 billion.
The plan provides relief for homeowners who can provide income verification and who are currently working but this is not the segment of the market that is defaulting, so it wastes our money.
The segment that is defaulting cannot verify income or assets and they usually don’t have good credit ratings. They are the individuals who should never have bought in the first place. This segment should be allowed to turn the deed over to the bank without a foreclosure proceeding and rent the house from the bank for one to two years and then move to a rental. The bank can afford to rent or hold until the market improves.
What should the government do?
The government needs to provide incentives to the entire country in the form of lower mortgage rates. A major refinance boom would occur helping all Americans lock into lower and more stable rates.That savings could then be recycled as consumption throughout the marketplace. Confidence will also return to the marketplace as homes become affordable and real estate prices stabilize. As these things occur, the toxic mortgage backed securities should rise in value and then the banks could sell them at improved prices.
Will Obama’s plan cause mortgage lenders to lose money by forcing them to refinance or renegotiate certain mortgage loans?
The president’s plan may cause the banks to lose a little money in the short run but lower rates will help stabilize real estate prices and stem foreclosures which will actually save the bank’s money in the long term. However, if the banks were to lower their spreads to traditional levels these homeowners and all homeowners would be able to refinance their homes saving them money which would then be pumped back into the economy. Lower rates will also promote new home buying which the economy needs.
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