Save the Housing Market- Refinance all Govt. Mortgages at 4%

Disclaimer:  I am a real estate attorney who does closings and practices in foreclosure defense.  I am not an economist.  I think I am smarter than Ben Bernanke, but I do not have as much power and degrees that he does. 

http://www.housingwire.com/2012/01/12/freddie-survey-shows-mortgage-interest-rates-at-all-time-low  Interest rates for a 30 year mortgage according to the Freddie Mac survey hit an all time low this week.  I am torn about this.  On one hand, I am glad that the interest rates are low.  Low interest rates are my stimulus package since I have been doing a lot of refinances.  This includes people who have refinanced twice or even three times in a short amount of time.  http://trifter.com/usa-canada/re-finance-twice-or-three-times-if-the-numbers-work/ Unfortuantely, I am not seeing people buy a house for the first time.  I am certainly not seeing people buy bigger houses like I did during the boom of 2002-2006.  The low interest rates are not helping the housing economy.  The low interest rates are not helping people suffering with the foreclosure crisis.  The only benefit I have seen to the low interest rates as far as the housing market is concerned is for people with good credit lowering their interest rates. 

We are still in the depression-recession caused by the collapse of the housing industries that started around 2007.  The Department of Labor said that the unemployment rate is 8.5%, the lowest it has been since March 2009. http://www.zerohedge.com/news/real-jobless-rate-114-realistic-labor-force-participation-rate  However, the real unemployment rate is a lot higher.  When you add in the underemployed and those who have given up on a job, it is at least double the 8.5 quoted. 

The real reason that Ben Bernanke is keeping the interest rates zero is because of the national debt.  We are headed toward another debt ceiling crisis in 2012 as the government needs another 1.2 trillion dollars of debt just to make it through one more year.  I remember driving to Grandma’s house in 1979 and seeing a sign of a trillion dollar national debt.  We have gone from 1 trillion to 16 trillion in just over 30 years.  It is outrageous.  If the interest rates rose even slightly, the debt crisis would get even further out of control.  If you review a speech http://socyberty.com/issues/ben-bernanke-will-devalue-the-dollar-40-in-2012-like-fdr-did/ by Ben Bernanke from 2002, he is doing exactly what he said he would do, that is have the interest rates at zero. 

As a libertarian-conservative and Ron Paul supporter, I do not like that the government is involved almost completely in the mortgage business.  (With the health care bill, they took over student loans completely).  Government has almost completely taken over mortgages as they insure about 90% of mortgages via Fannie Mae, Freddie Mac, the VA and the FHA.  The Fannie and Freddie debt add about another $5 trillion to the debt.  While I do not government involved in mortgages, it is the case now.  We need to prudently end this.  If the borrowers do not make the payments, the government (no, the taxpayers) is on the hook to make the lender whole if there is a deficiency balance.  Since that is the case, I think President Obama’s idea to refinance everyone at 4%, (the Freddie Mac average is just under that) is a good idea.  Anything that makes a borrower more likely to make payments, I think, is a good idea.  This should be implemented as prudently and quickly as possible.  Then the government needs to slowly get out of insuring mortgages.  They need to do as quickly as possible, but prudently not to crash the housing market.  Interest rates and stability in the housing market and the whole economy can slowly rise over the course of time and our money will no longer be a joke.