Here's an idea!
Here’s an alternative to the bailout. What if the Fed gave every homeowner six months of mortgage payments? Everyone! That way nobody can say that they’re being punished for being responsible which they would be if the fed paid for only those failing to pay. Every homeowner would get a full mortgage payment for their primary residence for six months.
Or is it more equitable to pay the banks who knowingly packaged up questionable loans and made untold billions on them for their failures? Everyone was pushing loans on anyone who looked for one and in many cases those who weren’t exactly looking.
After all what is democratic about bailing out banks? Of course you could ask yourself what would China do?
Here’s my question, do you think that would fix the economy more or less than the current proposal?
I personally think it would invigorate the economy much more and be cheaper. Just think about all the money people would be spending.
Here is my idea... Why doesn't the government buy out the homes of the three million struggled homeowners. $200000 per home * 3000000 homes = $600 billion dollars.
tho obviously its not really this simple...but what the heck...im just waiting for the debates...
i think - the average american mortgage is about 450k (near conf limit) - average mortgage rates are around say 6% (recent historicals) - that makes the average monthly payment around 2.5k (simple fix 30yr) - so thats about 15k in 6 mos for every home owner - there are about 75mm owner occupied units in america (1.5mm units = 1% of market)
total cost to do what you suggest (under these assumptions)?
drum roll please....
just over $1 trillion
hmmmm is all i have to say.
average american mortgage is 450k? haha what planet do you live on?
What do people get if they don't have a mortgage?
Or those that don't own a house?
Nothing... which is one of the reasons this idea would never work. As with all bailout plans, it rewards the risktakers and penalizes the folks who stayed out of trouble.
~~~~~~~~~~~ CompBanker
Moral hazard at an individual level is a scary thing to contemplate.
Simpler. Fed to buy million homes and burn them down. Supply goes down, price goes up. Economics 101.
I think any bailout is garbage. I work in the real estate industry (apartment lending) and have a lot of friends who work in single-family lending. There is plenty of liquidity out there for lending to people who are willing to put down 10 to 20%. There are plenty of people to step up to fill the void. In fact, my friend's new mortgage company has grown from 4 employees in January 2008 to 110 by the end of this month. As a renter, I'm offended that the gov't is trying to artificially inflate prices (as they've done for the last 30+ years).
I have had no opinion on the bailout all week and have now come to the conclusion that there will be no severe depression as a result of these banks and lenders failing. There is just so much liquidity out there and a ton of qualified buyers who are not pulling the trigger because prices are still inflated. Going forward, the gov't needs to remove itself from the housing industry--gov't intervention in the capital markets has failed! And their goal now is to CONTINUE to artificially inflate housing prices!
where YOUNGpunks get to complain but dont add anything constructive.
i grabbed the fannie conforming balance limit and rounded it up for what i disclaimed was an ad hoc calculation out of sheer boredom.
get your gorilla weight up before you get your hate up, son.
I think a more reasonable ad hoc calc would be to use mean/median home price and assume 100% leverage. If so, then the average mortgage size would be roughly $215k.
i think your idea is better - i was assuming the conforming limit used by the agencies was based on average home prices...after some research, turns out its a multiple of it.
i think you misspoke though, cause i also discovered that the average mortgage price is roughly $315k - its the median mortgage price thats roughly $215k.
don't be offended now... i wasn't hating. You, on the other hand, came off a bit strong. But you are certainly not adding anything constructive either by having bloated assumptions about the average mortgage. Plus, last I checked, this is an open forum so don't be throwing banana points and monkey ranks at me. It's lame. So relax, my friend... it's Saturday and the government is saving you :)
i tend to crush. what can i say, its my mo? ha ha.
i disagree with you, i think i helped frame a price tag for the op's suggestion.
but anyway. we should just move on. its cool.
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