Refi program needed to avoid home value drops: expert

Home prices may be on their way down nationwide, unless a new round of federal support for mortgage refis emerges, according to Harvard economist Martin Feldstein. The end of the first-time homebuyer tax credit — and subsequent decline in home prices — could lead to more defaults and foreclosures, Feldstein told Bloomberg News. And as more homes go into foreclosure, “more homes [are entering] the market, driving prices down,” Feldstein said. Solutions to this problem include an extension of income tax cuts for an additional two years, Feldstein said, along with a new federal housing program aimed at reducing principal on home loans. [Bloomberg]