Over at Economist’s View, Christopher Thornberg offers some ideas for stemming the foreclosure crisis – and while you may not agree with them, I’d rate them all much higher on the scale than having former subprime lending executives make new fortunes buying up distressed assets.
From Thornberg, a California real estate economist:
How about a national tax break for buying not just any home, but only a foreclosed property? How about generating a new group of potential buyers by simply not allowing current defaults to be recorded on people’s credit reports? How about streamlining the foreclosure process, making it quicker and easier for banks to clear properties and find a new buyers, thus reducing their losses?
I’ve previously talked about the possibility of wiping defaults away to let delinquent homeowners start over, calling it a Get out of Jail Free card for people too far underwater on their mortgages to keep their homes. That way, with clean credit credit, they can either find a decent rental or buy again someday, as Thornberg notes. I’m assuming they’ll buy a less expensive home the next time.
The Atlantic’s Megan McArdle also has had similar thoughts:
My lunatic proposal for the day: why not make it easier to move homeowners out of homes they can’t afford? Set up a streamlined foreclosure proceeding where a current or mildly delinquent homeowner can simply give the house to the bank and walk away. Do this with two legal provisos:
- No tax on the forgiven loan
- No black mark on the credit record. The bank marks the loan as fully satisfied.
The homeowner gets a fresh start, and the bank gets the house without the huge administrative costs that are normally associated with foreclosure. Everyone loses something, but no one loses a crippling amount, and there is no net transfer between two parties who are both in financial trouble.
These aren’t perfect fixes. I’d be rightly suspicious of trusting that banks and credit bureaus will be diligent in keeping their side of the bargain. Still, I’d rather explore ideas like these, instead of leaving the fallout to the former subprime wolves, who still seem to be at the door.
#1 in Conspiracy Theories
Andrew Young’s tell-all biography of John Edwards, hitting shelves next week, is surging in one Amazon.com category in particular. #1 in Conspiracy
1 Brigade and 1 Battalion
ISTANBUL – It’s 10 p.m. in the lowest level of the Istanbul airport. In 20 minutes I’ll be allowed to board my plane to Kabul, bringing me to the
$1.3 Million for Brown
The GOP’s candidate in the Massachusetts special election raised more than one million dollars -- double the goal -- in a 24-hour moneybomb on the Ron Paul
$1.3 trillion in federal spending unaccounted for, report finds
Despite calls for independent bodies to keep government accountable, the Sunlight Foundation’s most recent Clearspending report has found the federal
$1 Million for Toomey
Pat Toomey, the former Club for Growth president and leading Republican candidate in Pennsylvania’s 2010 Senate race, has announced a $1 million haul in the
1. Brian Schweitzer
As governor of Montana, Schweitzer doesn’t represent one of the most highly populated, high-profile electoral states in the country. But this
$1.89 billion given to states to fight HIV
The federal government Monday announced more than $1.89 billion in funding to states to fight the HIV epidemic with access to care and with more cash for the failing AIDS Drug Assistance Program. According to an HHS press release , $813 million of that money will go directly to the ADAP programming. An additional $8,386,340 will be issued as a supplement to 36 states and territories currently facing a litany of unmet needs and access issues.
$100 Million to Aid Pakistani Displaced Persons
More on U.S. efforts to aid Pakistanis displaced by the current military efforts against the Taliban. Secretary of State Hillary Rodham Clinton announced this
$1 Trillion for Fannie and Freddie?
That is the worst-case scenario, according to Egan-Jones Ratings Co., quoted in a Bloomberg article making the rounds. The agency says that if home prices
Bachmann uncomfortable over earmarks ban
Republicans appear to have boxed themselves into a corner with their portrayal of earmarks as wasteful spending, as many of them have backed a moratorium on
Troubled mine holds hope for U.S. rare earth industry
China currently controls 97 percent of the world’s rare earth production. The Mountain Pass Mine could change that -- if it can overcome serious environmental concerns.