Your thoughts.
How do you even attempt to bail out only the “good guys” without also bailing out “the bad guys”?
We can’t and should not bail out everyone.
The only people who are getting burned are those who stupidly bought more house than they needed because they could get a subprime ARM and those who bought houses at artificially inflated prices hoping to flip them for twice the money in 6 months. I have little pity for either.
I know how to prevent deflation. Cut those rates.
The top five holdings of Pimco's Total Return Fund are as follows.
1) Fannie Mae
2) Fannie Mae
3) Fannie Mae
4) Fannie Mae
5) Fannie Mae
And here I was wondering why Bruce Bochy was commenting on the sub-prime market when he should be much more concerned with managing the Giants. :=)
bump
None of the articles mention private mortgage insurance, these high risk loans required PMI for mortgages with less than 20% down.
You could, frankly, go further. Many other forgotten people rented during the real estate bubble. They wisely shunned the hype and refused to take on too much debt to buy a home they couldn’t afford.
Where are they now?
If politicians jump on Gross’ proposal, these people would be forced to pay higher taxes in order to save other, less prudent people from the alleged indignity... of having to rent.
The quote says it all in a nutshell.
Overall, a very well reasoned and rational assessment of what should be done and of what to expect and why. Home prices in some areas went up so fast and so high, artificially, that a good bump down is warranted. This is a crisis, not a catastrophe. In my finantial ignorance, I expect to see the economy in a mild recession next year, before a healthy economy bounces back strongly. Who knows?
Nice balanced assessment without the extemism either way.
Great post. Thanks!
bump
Only about 100,000 will be helped. All the others will lose their houses.
Do not believe the mortgage company shills who say 'Lenders lose money on foreclosures.' Historically, lenders make tons of money on foreclosures: All the bogus late fees, surcharges, penalties and bogus attorney fees and costs assessed to home buyers. Lenders make lots of money when foreclosures are filed within the first seven years.
But this may turn out to be the first time in history where lenders will lose money. Inflated home prices are falling all across the U.S. Homes will go for 50% of less of original purchase prices. Mortgage bond holders and lenders will eat the losses. So be it. Serves them right. JMHO.