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  • Solving the Housing Crisis in Bankruptcy Court [View article]
    The proposal will destroy the low downpayment mortgage, at least in the private market. Consider that every 95% loan is under water at closing due to the Real Estate commission going in and out. The lenders make the loans because the homeowners are supposed to be responsible and make the payments. When making the payments become optional, the downpayments will go up dramatically. 25% down may not be enough to get the job done.

    When there is foreclosure the home buyer has lost it all. Whatever equity they thought they had. And they have to move to something they can afford to pay for when renting. It is a valuable learning experience for them and for their neighbors.

    The lesson that the "cram down" will teach is that it is OK to screw the person who trusted you to pay back a loan. That will have very bad consequences.
    Jan 01 12:09 pm |Rating: +3 0
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