Upscale neighborhoods in California, New Jersey, Connecticut, and Massachusetts are getting set for another dip in home prices as the government plans to stop backing mortgages there by the end of the summer. For the past three years, federal programs have acted as a government housing entitlement by promising to reimburse private lenders in the event a home owner defaults and, in the process, have found themselves on the hook for loans going as high as $730,000. Obviously, this has kept the prices artificially high in these areas since private lenders wouldn’t have loaned money on them at all if Big Brother hadn’t promised to hover in the background and pick up the pieces.
