Mortgage bailout package

[tagryn]

This blog had the best analysis I've run across of the proposed new mortgage bailout program, including 5 reasons why it probably won't have the intended effects. Summary quote, from the comments:

This program looks to be especially doomed. At first blush, it seems that about 80-90% of mortgages won't qualify - too far underwater, borrowers don't have adequate income, the loans aren't with Fannie or Freddie, there are 2nd's or HELOC's that would be wiped out so they won't cooperate. I foresee some people getting their 2% mortgages and their principal reductions, and a WHOLE lot more people who can't, and will scream bloody murder that their neighbor has gotten a killer deal, and they can't - and are subsidizing their neighbor's killer deal. I can't understand why the Administration would design a program that, for every one person it benefits, there are 8 or 9 other people screaming "Where's MY 2% mortgage and bailout??!!"

This article in this past Sunday's Washington Post also looked at what homeowners who don't qualify, but are still underwater with their mortgage (& therefore can't refinance), can do. Answer: not much, but it offered this sliver of long-term hope at the end:

"The purpose of the plan isn't to reach out to every individual who is hurting," Wachter said. "The bigger impact is stabilizing the housing market. If the plan is effective and the housing market finds its bottom, we may actually see a significant decline in foreclosures and an increase in housing prices."

Comments

[foomf.livejournal.com]

The problem is that there are at least two groups who have this absolutist idea about how the economy must work and about the right-and-wrong of whether or not it's right to bail out a bank, an individual mortgage-holder, etc. As long as the self-righteous remain a factor in this, there won't be a program that works.

I would personally prefer to see them take the ridiculous, impossible mortgages that were sold by predatory individuals, jail those individuals, and have the government assume ownership of the mortgage to some degree. Then make sure the actual value is maintained, that the home is either paid for based on real values, or that it's sold based on real values. And too bad for the speculators who bought ridiculous packaged deals, and jail for the ones who created the fake securities based on these non-existent properties. They should be reimbursed to some extent, but all those fabricated baseless hot-air securities need to be dissolved. And mortgages need to NEVER EVER be bundled as fractional commodity packages again.

The bottom line important thing is that people's homes remain their homes if they want them; anything above and beyond that is fair game, in my own arrogant opinion. There are ways to achieve that but they would hurt the pocketbooks, and thus the feelings, of some very rich entities some of which might be people but most of which are corporations.

[tagryn]

I would personally prefer to see them take the ridiculous, impossible mortgages that were sold by predatory individuals, jail those individuals, and have the government assume ownership of the mortgage to some degree.

My pause on this is that many of these practices may have been unethical but were technically legal, and passing a law to throw them in jail after the fact would violate the Constitutional prohibition against bills of attainder and ex post facto laws. The idea Congress has been floating about taxing away all of the AIG bonuses is floating very close to that, as well.

[foomf.livejournal.com]

Technically legal? I believe the fraud laws could be shown to cover that, even if the neo-Con cadre in the GOP had (starting with Gingrich and with the collusion, forced or eager, of far too many people of other parties in Congress and in the Executive and Judicial branches) gutted the regulatory power of the SEC, gutted the regulations themselves, and set up this whole house of cards.

I think that even if criminal law and regulatory fines don't work, that the tort law system has a chance. At times I am glad that we have three parallel sets of law.

[tagryn]

with the collusion, forced or eager, of far too many people of other parties in Congress and in the Executive and Judicial branches
Oh, eager...very eager. I figure that's why Congress is all over the AIG bonuses, because it distracts attention from (a) the sheer size of the bailouts and (b) any inconvenient questions about exactly who had their hands in the lobbyist cookie jar while all this was going on.

The depressing thing is that the folks who had the most involvement are the same people being expected to reform the system. There's no "good guys" left to turn to; the Democrats in Congress were in it just as much as the GOP, which is probably why few warning calls were going up even by the minority side.

[foomf.livejournal.com]

Yeah, when McCarthy was shamed in public in the first televised congressional hearings, it was the beginning of the end for any illusions or expectations that politicians could be expected to behave honorably in public and private. When Richard Nixon was impeached, the partisan machinery lost its capacity for balance. So that's where we are now, shameless politicians acting in partisan ways to acquire and hold power without reference to the reason that power was granted.

In other words, public service by elected officials hasn't been completely forgotten, but it's far from the rule any more, and rampant parasitism seems to be on an upswing.