[muawiyah]

Concerning a bank financing a home for more than it's worth (on the current market) really isn't all that risky ~ and that's because the person buying that house is matching the costs up against the competing costs of rental in the same area.

Earlier in the Great Obama Recession people were encouraged to just walk away from bad mortgages but rents were cheap. Now you might walk away and end up paying a lot more than you were. That's an incentive to stay where you are and tough it out.

A strictly monetarist examination of the situation without consideration of competing housing options doesn't cut it.

This could change in a thrice if someone imposed rent control but at the moment in most places underwater mortgages still cost less than renting.

[muawiyah]

BTW, not surprised at all to find the upper crust folks at National Review to publish that article without first having it vetted by a working stiff.

Coupon clippers lead rather isolated lives.

[G Larry]

Yet another failed response in the Econ 101 Quiz!

If folks Refi their current mortgages what will they do with the “savings”?

1) The breakeven point for most refi’s is 12 months to recover all fees and points. SO THERE WON’T BE ANY “EXTRA CASH”!!!

2) Folks will pay off existing debt, accelarate principal payments, or PUT THE MONEY IN SAVINGS!

3) The reasons for NOT SPENDING remain the same! Obama policies and regulations are strangling productivity and job opportunity!!!!!!

[Nebr FAL owner]

Govt. should NOT speed up foreclosures it should investigate the frauds that have been carried out by the banks who have foreclosed on property that they don’t have clear title to . Lies have been told ,documents forged & passed off in court as real property has been stolen all with the approval/assistance of the political class. They are the ones who approved the mortgage backed securities in the first place.

[Night Hides Not]

For most underwater homeowners, a loan modification does nothing more than kick the can down the road 3-6 months. All it takes is a blown tire or other unexpected expense to eat up any monthly savings from a loan mod.

The housing market is still searching for a bottom, so let's speed up the process, without a dramatic increase in foreclosures. Once the "bottom" has been found, there's plenty of investor money waiting to get back in.

Loan mods should include write-downs of principal to current market value. The banks will have to take the haircut, and the borrowers will have to agree to make every payment ON TIME for 12-24 months to make the write-down permanent.

Since the banks can borrow from the Fed at 0%, they'll still make money on a 3% mortgage.

I know my ideas aren't favored by those that have struggled to pay their debts on time (as do I). But, "it is what it is".

I'm open to almost anything that will revitalize the housing market.