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Alternative mortgage plan

Discussion in 'Political Discussion' started by Stokes, Mar 2, 2009.

  1. Stokes

    Stokes Rookie

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    Read this in Slate, thought it was interesting enough to maybe warrant some discussion. It sounds like a pretty simple and agreeable idea to me, encourage renegotiation between lenders and homeowners by incentivizing a new deal for both sides. It would allow the problem to be solved by the people rather than the government. At first glance I like it a lot better than the government running the show. Thoughts?

    How to renegotiate all those bad home loans. - By Eric Posner and Luigi Zingales - Slate Magazine
  2. mikey

    mikey Rookie

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    There are 2 problems with the mortgate crisis:

    Problem 1: as the article states, one principal problem is that the houses are worth less than their mortgage

    However, there is another problem.

    Problem 2: Jobs -- without job and income, there is no payment even if mortgage is reduced.

    REDUCING mortgage payment IS NOT ENOUGH.

    Those "at-risk" homeowners must still have jobs to pay the reduced mortgage.

    However, those "at-risk" homeowners are also the ones who are most likely "at-risk" in their jobs; that is, they are the ones most likely to get fired.

    Throwing money at these people is like bailing out AIG. These are black holes.

    My solution is to send them to rental apartment.

    .
  3. Stokes

    Stokes Rookie

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    The thing I like about this plan, or at least the version of it that I'm thinking of, is that it would allow banks to decide who gets renegotiated with and who gets foreclosed on. This solves the problem of bailing out people who are just going to end up re-defaulting anyway. Banks are good at this kind of analysis, IMO better than the gov't would be trying to serve the same capacity. I suppose its all moot since this plan isn't going to be adopted, but I just thought it was a potentially smarter way for the gov't to operate; acting as a facilitator between banks and homeowners rather than trying to take over the process.
  4. Michael

    Michael Moderator Staff Member PatsFans.com Supporter

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    #12 Jersey

    How about you signed a legal document (many actually) and you abide by it? If I didn't pay my mortgage Principal Residential would have taken it from me end of story. Why should anyone else be any different? Foreclose, sell the houses at a today's more realistic rates to new homeowners and the the ones foreclosed on owe the difference. That's the plan I like.
  5. Stokes

    Stokes Rookie

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    That would work for me as well.

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