Thursday, January 26, 2012

A Down-payment Protection Plan

Economist James Wilcox argues in the N.Y. Times for a government-run form of insurance on home equity.  He writes:

Here’s how down-payment protection could work. Homebuyers could purchase protection from the government for a one-time fee, say 1 percent of the house purchase price, or $2,000 on a house selling for $200,000. The fee could vary with the risk of house price declines in each area. The plan would be open to all buyers. At the end of three years, the government would automatically mail checks to protected homeowners if average house prices in their area were lower than when they purchased their homes.

Steve Clowney

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