Mortgages: More Support for Principal Reduction [View article]
Bad math. If a trillion in mortgages is 20% underwater that is $200 billion upside down. Still a pretty big number and the banks are holding $800 billion in real estate (today's value???). Easier to give across the board principal cuts on all fannie & freddie backed mortgages originated in 2004 thru 2006. Reduce all government backed mortgages by 20% and the bond pools take the same haircut. Instant equity for a huge number of homeowners and less chance they will walk away. Also, lower payments and a chance to refi the mortgage at current rates.
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Bad math. If a trillion in mortgages is 20% underwater that is $200 billion upside down. Still a pretty big number and the banks are holding $800 billion in real estate (today's value???). Easier to give across the board principal cuts on all fannie & freddie backed mortgages originated in 2004 thru 2006. Reduce all government backed mortgages by 20% and the bond pools take the same haircut. Instant equity for a huge number of homeowners and less chance they will walk away. Also, lower payments and a chance to refi the mortgage at current rates.
Aug 02 12:47 pm
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All Comments by Tim Plaehn »Mortgages: More Support for Principal Reduction [View article]