Housing Bailout
You can check out Calculated Risk or The Big Picture for their comments on the new housing plan. I agree that this plan doesn’t acknowledge the fact that many people buying primary residences were still just speculators using leverage and hoping for home price appreciation. The people that bought homes with zero down negative amortization loans on the hopes that they could sell it after the price went up will still be bailed out now.
I also don’t like the ability to force cramdowns through either. The point of a secured loan is that the lender can take back the collateral if the borrower doesn’t pay. If the lender sees a benefit to modifying the principle owed, then it should be up to them to modify it. At the very least, if you had your principle reduced, any price appreciation up to the original loan amount should go back to the lender if you sell your house for a profit ever. Oh well. Punish prudence and reward recklessness.
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