Monday, March 10, 2008

Liberate Housing

"Any debate about a housing bailout can be put aside--the bailout is underway, even in advance of specific plans being shopped around Washington by Bank of America to prop up home prices with direct subsidies to homeowners whose debt exceeds the value of their houses. ... But this time, the liquidationist school has been routed--so named for Herbert Hoover's Treasury secretary, Andrew Mellon, who said' 'Liquidate labor, liquidate stocks, liquidate the farmers, liquidate real estate. ... It will purge the rottiness out of the system.' ... So here's the question: Do the people who would be bailed out want to be bailed out? Do they benefit from being bailed out?", Editorial at the WSJ, 27 February 2008.

See my 21 November and 10 December 2007 posts. Who is Hank Paulson's Treasury trying to kid? The thrust of all its efforts is to protect the banks, not the peasants.

1 comment:

Buzz Saw said...

On the front lines in the mortgage foreclosure crisis, lender and loan servicer Dennis Lauria says his deepest losses are from borrowers who owe more than their homes are worth and simply mail in the keys, rather than try to work out a new payment plan.

"I can't get you to pay if you've got no skin in the game," says Lauria, senior vice president of Popular Mortgage Servicing in Cherry Hill, N.J., who says 14% of his customers with subprime loans — high-interest loans given to people with poor credit ratings — are in default...

“Even some homeowners who can afford to pay their mortgages are defaulting, Lauria says, because their house might have lost 30% of its value, and they figure it will be a long time before it’s worth what they paid for it.”

“‘They say, ‘If I play my cards right, I can live here free for 12 months, maybe longer’ before the lender can foreclose, Lauria says. ‘Our challenge isn’t contacting the borrower. I can talk to them, but they stick their tongue out at me.’”

“Martin Goodman, president of Residential Capital in San Diego, says making contact is only one challenge. The other is persuading delinquent borrowers to tell the truth about their financial condition. He suspects at least 90% of borrowers don’t explain the real reason they are falling behind on their payments out of fear it might accelerate their foreclosure.”

“‘Everybody’s grandmother is dying. Everybody’s kid is having surgery,’ Goodman says...