The Fed: We Have No Idea What We're Doing [View article]
Here's your program. Have the Fed offer $200k "cash" to homeowners with a $200k plus mortgage (mess with these numbers and means test to suit, etc.). Owner ops in or not. The $200k goes straight to the lender and they provide a refi to current low rates, no questions asked. In exchange the homeowner agrees to a Fed lien of say $225k per $200k of loan reduction. When title changes hands (if we actually have titles anymore), Fed gets their $225k fee back. This bails out the banks home loan wise, hugely reduces monthly mortgage payments (pushing a major stimulus back into the pot year after year), vastly reduces the projected ROE inventory, stops the housing price decline, shows up on the Fed's sheet as cash flow positive based on the $25k lien fee, and more good econ things courtesy of the stimulus. So we take out the bulk of the home default problem, clear the banks of the mortgage issues (both new, and the toxic mbs mess), and stimulate the economy tremendously by diverting the bulk of monthly house payments to discretionary funds.
The Fed: We Have No Idea What We're Doing [View article]