U.S. Government Struggles as Biggest Seller of Homes

Ahhh....the tangled webs we weave.  First the Congress came out with the plan that ALL Americans should own homes because it was the American dream.  Then Congress told the major mortgage lenders to ease off on all the difficult mortgage application and credit questions.  Questions such as, "Can you afford this house seeing that you don't have a job?"  And finally Congress told the lenders not to worry because if the mortgages went bad then the Federal Government would stand behind them and make everything OK.

Sounds good!!  What could possibly go wrong?...because EVERYONE knows that real estate ALWAYS goes up in value...right?  After all, they aren't making it anymore....or so goes the false saying that was so popular right before the crash.

Now we find out that the U.S. government has just become the largest seller of homes...homes that they got when they had to back up the lenders after thousands of homes went into default.

For sale or rent by motivated owner: 248,000 foreclosed homes.

The U.S. government, which has become the nation’s biggest owner of residential properties, is looking for ways to reduce and manage its huge inventory without swamping the real estate market or exposing federal agencies to enormous losses.

Government-run Fannie Mae, Freddie Mac and the Federal Housing Administration now own about a third of the country’s nearly 800,000 foreclosed properties. With that inventory predicted to grow, they are looking for new ways to cope.

In a joint public appeal this month, the agencies invited the public to send in suggestions for managing the inventory, particularly ideas for turning foreclosed homes into rentals.

Karen Petrou, managing partner of Federal Financial Analytics Inc., said the unusual appeal is a sign the agencies recognize the backlog of distressed properties has grown so large that it can’t be sold off without inundating the market and depressing prices.

“They’re stuck,” said Petrou. “All sorts of people are demanding they do something. They don’t know what to do but they have to do something.”

See it here;  http://www.bloomberg.com/news/2011-08-26/u-s-government-struggles-as-the-biggest-seller-of-homes.html?cmpid=bit 

You gotta love that quote, "They don't know what to do but they have to do something."  So what is the "something" they have done so far?;  print money by the billions and purchase U.S. Treasury's at auction and attempt to drive the interest rates down so more people can refinance their homes and also buy homes with cheap interest on new mortgages. 

In the meantime, with interest rates at or near 0% at bank savings accounts, anyone who saved money for retirement is being punished by not being paid anything on their savings.  So the government's latest plan is to punish those who were responsible and attempt to continue rewarding those who made bad choices and/or were irresponsible.

That ought to go well. (insert sarcasm)  But hey....they gotta do something because the children are getting restless.