I’m thinking of getting into politics. I’ve been watching testimonies, from both sides of the aisle, about the credit crunch and impending doom of mass foreclosures. I figured out the problem:
The housing prices were too damned high.
Now, my stance, to this point, has been pretty clear; let the market act as markets do, with commensurate consequences to each and every market participant. Lenders and borrowers lose. Lenders lose money, and borrowers lose the freedom to buy another home, with the use of a mortgage, for a period of 4-6 years. (remember that statement)
As I’ve said, I’m thinking of getting into politics so that straight talk and libertarian approach is somewhat unacceptable in the vote-seeking game. I think I need to find a solution that will put me in a picture, alongside Hillary, Arlen, Barney, and Hank. My solution may also fire a shot across the bow of our economic enemy, China; that’s just a bonus for the cold warriors among us.
The Happy Homeowners Act of 2008 understands that foreclosures are far reaching in their devastating effect. They leave homes vacant in neighborhoods, they attack the esteem and morale of the borrowing family, and what is often left unsaid, they whack the investors’ principal. Talking heads have said that the homeowners just want to live in peace and harmony, in their slice of the American Pie. So… here’s my proposal:
Mark to the Market or yell “do over”. We’re all in this together, right?
1- Homeowners overpaid for their homes. Those homes are worth some 20% less than what they paid for them. The investors will take a loss of 20% (or more) should they proceed with foreclosure…so…just take the loss today. Reset the loans to a loan amount the borrower really can afford.
2- Investors will lose money but can recoup some of those costs from the market participants that profited. Real estate brokerages, mortgage brokerages, originating lenders, servicers, Wall Street securitizers, appraisers, home inspectors, stagers, and everyone who made a dime off the transactions during the “excessive period” Read more