Are Foreclosures Good For America? Part 4

Are Foreclosures Good For America? Part 4 by Bill Roberts

Everyday there are more mortgage defaults filed. The banks are suffering. Congress can't get their act together. A solution seems to be elusive.

The Secretary of the Treasury went up the hill to ask Congress for 700 Billion dollars to solve the problem.

Congress said NO.

But we still need a solution so here is my contribution to the discussion:

We need a new Resolution Trust Corporation, but this time with a different imprimatur: SAVE THE HOUSE, not sell the house.

It is clear Congress doesn't want to give the $700B to Hank Paulson but the crisis still needs to be dealt with.

It is also clear the people don't want to bail out Wall Street, which is how the media has characterized this rescue plan.

But buying mortgages from banks at 50 cents on the dollar is hardly a bailout. The banks have been duly chastised and punished. What more do you want?

If a new RTC gets your mortgage for 50 cents on the dollar then they could "restructure" the loan to more fully reflect the actual value of your house. They could "convert" your mortgage to a thirty year fixed at an attractive interest rate. Maybe then you would be willing to make the payments.

The RTC could also make all these loans FULLY ASSUMABLE. That would help you to be able to sell your house, if that is what you want to do.

All in all, a new RTC could bring stability to the housing market which would have a positive impact on the entire economy.

We Win!

When all is said and done and the final accounting of the cost of this program is determined, we will find that it actually paid us to do this rather than cost us.

Bank failures would stop or slow way down, foreclosures would almost disappear altogether, home values would stabilize, property tax revenues would return to normal, and Federal tax revenues would increase with a "rising tide" of economic activity.

And the new RTC would probably make a small profit.

See also "Are Foreclosures Good For America? Part 3"

"Are Foreclosures Good For America? Part 2"

"Are Foreclosures Good For America?"