Both Parties Move to Aid Struggling Homeowners

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Analysts caution that any sweeping effort to reduce mortgage foreclosures would pose daunting challenges. The biggest challenge would be providing financial help to the three million people who are in real trouble without starting a rush to cash in by the tens of millions who are not.

But Richard Berner, chief economist at Morgan Stanley, said that ignoring the problem would be even worse.

“Home prices, housing activity and both mortgage lenders and borrowers will suffer,” Mr. Berner wrote in a recent report. “The economic cost of such further declines would exceed the cost of mitigation.”


Umm... let me see if I understand this.

You gave away money, for free, to american citizens so that they could go buy themselves a house.

The banks responded by multiplying the prices of those houses BY FIVE and setting up sub prime morgages that are guarenteed to rip off the consumer with an interest rate that jumps to something insane after two years, which they KNOW the consumer cannot afford, and thus inevitably, there was a mass defaulting on morgages. All because you gave away free money.

And your solution to this problem is ...

... give away some more free money.

And let the banks make any contract they like , force or trick the consumer into any conditions they like , so as to do it all over again.

Its the sub prime crisis RELOADED !

The prices have to be permitted to drop back to normal. It's just that simple. Otherwise you're just handing the banks an endless series of blank checks.

You need to be insane to buy a cruddy two or three bedroom house on a busy street for three quarters of a million dollars, and by the way you only make 30 000 a year. I don't care how cheap a loan you give me , I wouldn't do it.

and if the land lord does it , and decides to charge me 3000$ / month rent , which is more than I make in a year , he's insane too, and I'm out of there !

It has risen high , now it must crash.

Put the money into unemployment insurance and relocation funding to let people move away from places with insane rates. That will solve yoru problem right quick. Uncapture this "captive market" that the land lords think they have , and things will fix them selves with amazing alclarity.