Jon Smirl

How About Adjustable Principal Mortgages Instead?

"The cost of these put options could be passed along to the consumer in the form of a slightly higher interest rate"

Yes you could build this. It's not going to be a slightly higher rate. Either you buy a 30 year put (expensive) or multiple short term ones. The price of multiple short term ones is going to spike during a recession. Passing the cost of this on as a variable payment means that your payment will also spike upward in a recession.

You can't make the risk go away, somebody (lender, government, home owner) is paying a premium for it whether they know they are or not.

The perfect form of this is to put your down payment in a savings bond and rent. Now you don't have any capital risk.

Foreclosure Moratoriums: It's Time to Get Real

I was so stupid for not buying that $20M ocean front house for nothing down! With cram downs, modifications, assistance, etc I'm sure we could have modified the mortgage until I was able to afford it. I would like to thank all of the tax payers for helping me out by providing this necessary subsidy to keep me in my home.