squawk

Three Problems with the Fannie / Freddie Mortgage Modifications

Haven't studied the latest program, but IMHO, the only way such a bailout makes sense, if like Paulsen's proposed bailout to the banks, the US Gov't receives an equity participation for the bailed out collateral so, when the market recovers, however long it takes, the gov't (i.e. taxpayers) receives a RETURN for bailing out these borrowers who shouldn't have been given these loans in the first place.

Policy-wise, I can understand the need for a "quick-fix" in order to preserve real estate values in nearby areas where borrowers are making monthly payments & are not underwater. But the leaders in Washington need to communicate to these imprudent borrowers there's no such thing as a free lunch. The policy should be "I will help you now, but you will pay me later" in the form of equity. There is absolutely no reason why these borrowers should keep 100% interest in their home after receiving a gift at the taxpayers' expense.