Financial advisor Dennis Tubbergen believes programs to stabilize housing market in U.S. have had little effect.

Grand Rapids, MI -- (SBWire) -- 10/06/2010 -- In a September 5, 2010 article in The New York Times, the writer notes that the deep plunge in homes sales over the summer has forced the Obama administration “. . . to choose between future homeowners and current ones, a predicament officials had been eager to avoid.” According to financial advisor Dennis Tubbergen, the administration seems to have made the decision to side with existing homeowners.

Tubbergen, who is CEO of USA Wealth Management LLC, a federally registered investment advisory company, notes that the same decision was made by the administration back in February of 2009, when it rolled out its mortgage modification program.

“That program has had little effect in stabilizing the overall housing market,” explains Tubbergen. “The Obama administration isn’t giving up, however. Recently, President Obama announced a new initiative designed to stabilize the housing market until the economy can more fully recover and create an increase in demand for homes.”

According to the Times article, the initiative allows banks and other creditors to ‘write down’ mortgages to less than the value of the property and ‘hand off’ the loan to the government, thus refinancing borrowers into loans backed by the Federal Housing Administration.

“I don’t expect this initiative to be successful either,” states Tubbergen. “There are 11 million homeowners who are currently ‘upside down’ in their homes, owing more on their mortgages than the homes are worth. This number is likely to get larger over the next 18 to 24 months.”

Tubbergen explains we are heading into another wave of mortgage rate resets, and that the smallest dollar amount of rate resets occurring in any month in 2010 or 2011 exceeds the $11 billion the administration is allocating to ‘fix’ the problem.

“This initiative is simply set up to fail given that, when measured in dollars, the size of the problem dwarfs the size of the proposed solution,” concludes Tubbergen.

For more information on Dennis Tubbergen’s views, visit http://www.dennistubbergen.com.

The opinions expressed herein are those of the writer and not necessarily those of USA Wealth Management, LLC. This update may contain forward-looking statements, including, but not limited to, statements as to future events that involve various risks and uncertainties. Forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause actual events or results to differ materially from those that were forecasted. Therefore, no forecast should be construed as a guarantee. Prior to making any investment decision, individuals should consult a professional to determine the risks, costs, benefits and fees associated with a particular investment. Information obtained from third party resources is believed to be reliable but the accuracy cannot be guaranteed.