Oct
15
How Should We Stem The Housing Drop?
ByHow?
I hear Phoenix is down 80%, San Francisco *where I live* is down about 20% due to fundamentals, and I hear San Diego is down 50%.
What should we do to stem the foreclosures and housing drop?
Do you think the bad bank is a good idea?
Nothing. The market will find its own natural level
Many people will lose their houses but will eventually buy again at much lower prices.
This drop is what happens when a bubble bursts and is a necessary pain which must be endured.
The “Bad Bank” was the original idea, and, assuming we could revive the market for mortgage-backed securities, it was probably a pretty good one. But give our politicians a good idea and they will screw it up every time. The “Bad Bank” would have allowed the government to buy the toxic assets (defaulted home loans) of our banks at a discount to get them close to their fair market value when the market stabilizes and then sell them. Instead, we started buying stock in those banks.
Buying the toxic assets of the banks would have given them a revolving line of credit so they could have continued making mortgage loans. Just buying their stock was a one-time shot in the arm. If the banks cannot sell their mortgages in the market, they will choke on them. That’s what is happening now. They are choking on their mortgage loans. Their capital is tied up in mortgage loans they cannot sell off.
Mortgage brokers make loans and sell them to major lenders. The lenders then sell them to investors. Now the investors aren’t buying, so the major lenders aren’t buying. That’s why we have a credit crunch.
If somebody shoots Barney Frank tomorrow morning, I won’t shed a tear. His “solution” to the problem is to have the banks write down their loans to what their borrowers can “afford” to pay. No way, Jose! Let those borrowers pay what they owe or foreclose and put the deadbeats out on the street.
Barney and friends are trying to create welfare with a roof on top. Screw him.
Let the market find bottom. You cannot recover if the fed keeps inflating the bubble despite the gaping hole in it.
I paid my bills and lived within my means so this hurts me more than those walking away from their houses. Let it happen so we can get back to building equity in our homes.
Giving people lower interest rates would be fine, but lowering principal is illegal and unconstitutional.
The bad bank is a terrible idea. Convincing private entities to buy up toxic assets with the governments guarantee is what brought us to this point to begin. Why would we do that again?
the market went up over 300% in some places. So the market is correcting itself. We have to let it go. Allowing the government to bail us out will not help us. The government created the mess in the first place by forcing lenders to make bad loans.
you mandate that mortgage companies shave off $1000 off first time homeowners…
you are giving spending power back to home owners….and that money will be spent in the local economy…Thats $12,000 a year Americans will pocket and will spend…$1000 goes over the saving threshold.
You see if you give someone a one time check of $300…people don’t go crazy over it…but if they know they will be saving $1000 every month it builds anticipation to create more spending….
you do this for mortgage payments that fall btween $3500 to $4500….
this simulates growth the 90% of people who can pay their mortgages…
It gets money back in circulation.
Sales tax revenue will increase…
profits rise with businesses who can than hire more people back to work…
Paying for schools with income taxes instead of property taxes should do it.
Why, I am making a killing by taking the houses from banks at 25 cents on the dollar….now is the time to rip off the government.
The GOP will tell you to do nothing at all.
No change and No hope from Obama too..by looking at today’s news