I’ve been reading my latest edition of U.S. News & World Report and besides politics, crime, the war, etc., I found an interview with Bill Gross, the founder of one of America’s largest bond funds management companies. His answers to questions about the housing industry were very interesting and make me even more curious about what is being discussed in the backrooms of Washington, D.C.
Mr. Gross addresses how to stop the decline in home prices and said monitory policy can help homeowners with ARM mortgages, but says it doesn’t really help people trying to sell – just those trying to buy. This is because lowering interest rates may have a short-term impact, but 30-year mortgages haven’t come down like the fed funds rate.
Mr. Gross believes it necessary for the goverment to essentially subsidize mortgages, not in a ridiculous way, but for people who have demonstrated good credit and are willing to pay on time. As far as the expense of such a program, it wouldn’t be nearly as expensive as the $150 billion stimulus package that has just passed.
“We need the FHA to provide mortgages with, as least in my opinion, a subsidized interest rate. … [for] a government agency is overseeing the list of buyers as opposed to “greedy loan originators that just ran it for a fee.”
Mr. Gross also said,
“If your house is down 20 percent, you’re not in a rosy disposition to spend money anywhere. You think you’re getting poorer by the secodn. We have to avoid that.”
Read the entire Q&A article in U.S. News and World Report here.
