The Atlanta Journal Constitution carried a recent column by professor Seth Weissman, a real estate attorney and adjunct professor of city planning at George Institute of Technology. Weissman’s column states that approximately 30% of all mortgages are now under water. This drives down value and causes walk away foreclosures. “The sledgehammer we have been taking to the housing market to prevent mortgage fraud needs to be replaced with a scalpel because the former approach is depressing the recovery of the housing market.” Weissman says: “Rather than looking at investors as vultures or potential mortgage fraudsters, an attitudinal shift needs to occur where they are embraced as the potential saviors of the housing market that they are. Until investors start making money in housing, and lots of it, there will be no recovery in the housing market. This will only occur when disincentives to invest are eliminated.” He also advocates allowing defaulters to stay in homes as renters, to reduce the pressure for short sales. Treating condos similar to single family homes and easing appraisal standards would also help deals close that today are falling apart for reasons besides credit standards.
