The real estate market slows down again.
Since they (the banks and the government) stopped the loan forgiveness on short sales, real estate activities slowed down again.
Homeowners who are underwater will not sell their houses because the banks will not forgive the balance on their mortgage anymore.
Therefore, if house sales slow down related businesses slow down too.
Attorneys have no sales contracts to review, loan officers have no loan applications to prepare, home inspectors will have no basements to crawl and Home Depot will not have paints to mix.
This domino effect shall push the economy to crash once again.
Banks lent money to unqualified buyers in mid-2000 to buy houses and a few months later this loan term changed and made them unaffordable and created loan defaults.
They created a short sale program that allowed these homeowners’ excessive loan balance to be forgiven and reset the housing market.
But now with the non-existence of this program homeowners have no choice but to stay put and stay there forever.
Bring back short sales and save the economy.