My brilliant colleague Richard Green is the first on a panel for the Los Angeles Times to hazard a prediction on where the markets are going in California. They also sought advice from agents and developers and a foreclosure investor, who doesn’t even try to hide his self-interested opinion that the gummint needs to get out his way when buying up other people’s misfortune.

Here’s what I don’t understand: why are new buyers getting so little support from both lenders and government programs?

I understand the desire to try to keep people in their homes, but some mortgages are beyond help, and those folks are, unfortunate as it is, better off out from under the property even with the hit to their credit and the pain of moving.

But here’s what I don’t get: foreclosure relief essentially ties up and extends credit to homeowners who are already in huge trouble. However, banks appear to be refusing to lend to anybody but the cream of the crop in terms of new mortgage buyers. So if you want in, you have to be on the high end of the buying–perfect credit, 20 to 25 percent down. Why in heaven’s name anybody thinks that these conditions are going to cause the market to pick up is beyond me. These conditions favor investment companies buying up properties and a large number of renters. I guess that’s ok if all you want is to protect current home owners and their assets, but it doesn’t help in terms of getting new homeowners into asset accumulation. For individual owner occupiers, the private banks’ risk aversion will also cause increase burdens on the FHA as many, many people in California will fall well under 730 credit score and 20 percent down (when crackhouses cost $350,000).

I don’t get it: is there no policy ground between being too lazy to check income and assets for any mortgage down to 620 and requiring that a person has to have $150K (and more) in the bank and perfect credit (730 to 800)?