http://tinyurl.com/m7ftum
Most of the time I can agree with the WSJ and their respective authors' opinions as to the Real Estate market but with the above referenced article I take exception with Mr. Feldstein's take on the method in which we might stave off future foreclosures. In the article he suggests that the very people who are underwater with their current mortgage would somehow miraculously agree to the notion that the government will forgive a portion on their mortgage(not enough to make the bad situation an even break-even) and in exchange, the bank that holds your mortgage now has recourse against the borrower even if the borrower files for bankruptcy. Really? Who is going to stand in line for this ridiculous notion? Does Mr. Feldstein really believe that you would put yourself in this position because it will help everyone as he suggests? Let's be honest Mr. Feldstein; many of the problem loans that were generated that were "subprime" were not leant to people who were thinking of the common good. Those who find themselves severely upside down now due to a job loss are not thinking about the common good right now - they are thinking about how they can satisfy their family's "common good."
The problem stems from policy wonks who have little contact with the market, they wish to control, and their meddling into the free market system. The push to 'regulate' the masses into housing is what created our housing bubble and the FREE market is returning the level of home ownership back to 1985 levels.
The moral of the story is this; let the market work. There will be ups and downs. Interfere with the market and the ups and downs create more opportunities for a loss of our Freedom.
Remember GM?
Most of the time I can agree with the WSJ and their respective authors' opinions as to the Real Estate market but with the above referenced article I take exception with Mr. Feldstein's take on the method in which we might stave off future foreclosures. In the article he suggests that the very people who are underwater with their current mortgage would somehow miraculously agree to the notion that the government will forgive a portion on their mortgage(not enough to make the bad situation an even break-even) and in exchange, the bank that holds your mortgage now has recourse against the borrower even if the borrower files for bankruptcy. Really? Who is going to stand in line for this ridiculous notion? Does Mr. Feldstein really believe that you would put yourself in this position because it will help everyone as he suggests? Let's be honest Mr. Feldstein; many of the problem loans that were generated that were "subprime" were not leant to people who were thinking of the common good. Those who find themselves severely upside down now due to a job loss are not thinking about the common good right now - they are thinking about how they can satisfy their family's "common good."
The problem stems from policy wonks who have little contact with the market, they wish to control, and their meddling into the free market system. The push to 'regulate' the masses into housing is what created our housing bubble and the FREE market is returning the level of home ownership back to 1985 levels.
The moral of the story is this; let the market work. There will be ups and downs. Interfere with the market and the ups and downs create more opportunities for a loss of our Freedom.
Remember GM?
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