Mortgage rescue plan

The details of the new mortgage rescue plan were given yesterday from the administration.

What are the effects of the plan to the housing market? We all expect lower foreclosure rate. But does it mean it is good for the housing market?

Probably not. I expect the home sales will decline because of the new plan. Eecently home sales increased with lower home price. Most of the sales were coming from REO listings. The price has dropped to a level that attracts a lot of bargain hunting. With less foreclosure supply, home price is likely to decline slower than before, and so houses with attractive price will be hard to find. With the sales slows down, it takes longer time to remove the existing inventory.