Nov 30 2007 11:25AM | Permalink | Email this | Comments (0) |
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A coalition of lenders and government regulators could announce as soon as next week a plan to help (not bailout!) homeowners that are going to be hit with resets on their ARMs, according to reports out today (see here and here). The details are still sketchy, but it sounds like the plan would freeze some borrowers' interest rates for several years, similar to a plan recently announced in California.

These things have a more immediate impact on builders, of course, but today's buyers are tomorrow's remodeling clients.

This plan could mean less erosion in home prices in the coming months and years, which is definitely good for remodelers as you try to convince people to make significant investments in their homes. So from that viewpoint, I suppose it's a good short-term pick-me-up for the industry. 

On the other hand, I wonder what the long-term impact will be. Is it really a good thing for the industry for the government to step in and clean up the mess made by stupid/greedy builders, lenders and homeowners? Plus, is it fair to responsible buyers who signed up for the higher fixed rates instead of falling for the teaser rates? I certainly don't want to see people losing their homes, but does artificially propping up the market do anything but delay the inevitable?