Yes, the $700B is the talk of the nation, but recently there was a more important event that will affect real estate throughout the country.  If major lenders and the government would follow their lead, there was a precedent set significant enough that will affect supply of homes on the market and will resultantly stabilize values for property owners. 

The creative solution was in the details of the agreement where Bank of America buys Countrywide.  Bank of America purchased Countrywide at a value where they were willing to allocate over $8 Billion dollars to right the wrong of aggressive and improper mortgage loans.  These aggressive loans helped lead up to 400,000 properties toward foreclosure in a decreasing value market.  This company will identify and modify loan rates to make them affordable with the goal of keeping the home owners in the properties that if left alone would end up as distressed sales in the housing market.  The quantity of homes is so significant that if this model were duplicated by other lending institutions, it would have an impact on home inventory supply throughout the country. 

Again, the goal is to provide an option to the homeowner and to make it affordable enough to stay in the home.  With fewer homes selling at an aggressive discount due to vacancy and quick sale pressure from resultant bank holding cost, supply of distressed homes for sale would be lowered and as a result pricing would stabilize.  Many homeowners who are saddled by unmanageable monthly payments are unable to make that payment and they head towards foreclosure. 

Whether or not you feel that it is only fair that you make your payment and others should be responsible for making theirs, keeping owners in their homes is good for the real estate market.  Like it or not, if there are foreclosures in the neighborhood that offer incredible value compared to standard resale properties, the buyers will focus on where they can get the best price especially in an uncertain financial market. 

Mortgage lenders and the US Government should take note of this precedent and follow the lead of Bank of America.  A stable inventory level of homes with the current demand will stabilize price for people who need to sell.  The result of following this model is a better climate to sell homes where your competition isn’t owned by the bank. 

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