bendra

U.S. Government Paying Homeowners to 'Walk Away'

I think this is legitimate. It makes more sense to give distressed homedebtors some money to help with moving costs and help them get into rental situations that they can afford than trying to prop their mortgages up. Its much cheaper and more humane as well.
No one is being made homeless by this; people leaving their underwater homes will be able to afford to rent; probably they will be able to afford to rent a better place then they left at a lower monthly cost. Helping someone doesn't mean having the government buy them a house.
Prices need to fall a lot more to make houses affordable at least where I live (SF Bay Area) using traditional measurements of affordability such as 3x average income. It is counterproductive to try to stop this, but as compassionate persons we can do some small things to soften the blow to those who got caught up in the bubble and bought more than they could afford.

Why Did the Mortgage Market Go Out of Control?

This article presents a big oversimplification. I did IT work for a major mortgage company back in 1998 and the great majority of their loans at that time were originated from a different bank; the business of buying and selling loans was already commonplace. You'd have to go back at least 15-20 years to get to a time when small local banks held and serviced the mortgage loans they originated. Why did the situation spin out of control in the last 10 years? For me a better question is why it took as long as it did.