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No. of Recommendations: 3
For example, you could set a floor price on real estate with programs that offer to buy home mortgages for 50% of their 2007 assessed values.

How does this solve the problem? Artificially reinflate housing prices? House prices in many cases are down substantially, but often they're still not priced right. As a buyer, I shouldn't pay too much because the last buyer paid too much.

A major stumbling block to moving houses in today's market is that based on the longevity of this downtrun, many of the houses on the market are sufferring from deferred maintenance. With today's lending rules, a HELOC to bring houses up to standards and perform this deferred maintenance is not available.

As someone who bought their second home in 2010, I can tell you we passed on numerous houses that were priced right for their existing condition, but which required any type of work. Financing for house renovations is not available over 80% of the appraised value.

If the FED were to do anything, possibly guaranteeing or backing mortgage/financing BASED upon "2007 appraised values" would free up capital for new buyers to make purchase/renovate/upgrade scenarios possible or an allowance (say 20%) over a 2008-201? purchase price. Essentially the FED would be saying house prices are "artificially" low and the FED is confident that house prices will return to some arbitrary level and is willing to put their neck out.

It's a bit of chicken and the egg in that until the financing is there, many houses are locked in a downward spiral where upkeep is being put off and off and the value of property is headed down.

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