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The mortgage companies can take a little off the top or they can get their heads shaved. Either work with people to help them stay in their houses or be prepared to get strapped into the barber's chair.
Which makes more sense?
I agree banks should deal with thier bad mortagages but NOT at the expense of taxpayers. NO taxpayer money to write down loan values! To be clear, don't give any of my earnings / taxes paid to someone else who got in over thier head. Let the banks and the home owners who got each other in trouble solve the problem at thier expense.
We've lived in oue home for 13yrs and are NOT "upside down" on our loan. We have about 5yrs to pay it off. If the gov't is going to start rewarding people who took out loans they couldn't afford, then I want my taxpayer funded handout too.
It cannot be overstated how effective a government gaurantee on a mortgage can be in stimulating more lending by banks. Many multi-unit housing projects are stymied by the loan to value ratio that over the course of the year it takes to concieve/design/bid/ build the project, it no longer supports the prerequisites of the bank. If the government steps in to help the equity picture by simply guaranteeing the loan or the value of the project many more banks will part with their money.
I'm not sure what the solution is, or that there is one, or should be one. But what I do know is housing is by and large the largest drag on the economy. Instead of plowing money into my house or a new house, we've been plowing our precious disposable income into the mortgage in hopes of getting to a neutral equity position. I feel bit by the dog of timing in my purchase (late 2004) and by my timing of graduating from college (2001) more and more a slave to the larger economic forces outside of my immediate control. If I've learned anything is that I need to position myself either to take advantage of these larger opportunities when they come around the next time or to not be subject to the whims of others and macro bubbles... That's freedom.
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