Barbara Kiviat has a post up on the Curious Capitalist that discusses the new rules regarding second mortgages under Obama’s housing rescue plan. It’s a good post with some interesting thoughts beyond the new regs.

One idea she throws out concerns investor owned properties:

First, the Administration continues to ignore the problems caused by investor-owned homes. All of its programs are for houses that people own and live in. I know there’s a big moral hazard argument against helping folks who were just out to make money—now that making money has such a bad rap—but if part of what we’re trying to do is stabilize housing prices, then investor-owned residences matter. Especially in markets like Las Vegas and Miami.

This would have been a good idea about a eighteen months ago. Most of the amateurs that stumbled into inveting in single family homes have long since turned them back to the banks after having discovered that negative cash flow and negative equity are bad partners. Likewise, the more astute who leveraged up too much knew enough to cut their losses and have done so. Even if they haven’t the degree of modification to get the properties back even to neutral would probably be unacceptable.

That leaves the pros who didn’t over leverage and have or maybe I should say had the wherewithall to stay the course. Those that can are continuing to do so but those that have suffered from the recession aren’t going to be saved by a loan mod. It’s hard cutting a check for a couple grand to repair an air conditioner when you’re worried about COBRA payments.

It’s hard to make a case for hanging onto an investment property that’s fifty percent under water. You have to have a really long-term view to think it’s ever going to pay off. Continuing to pump money into it instead of alternative investments with better prospects is a suspect strategy. I’m not sure we would really be doing investors a favor by letting them modify their loans.