So why doesn't the government create a shared equity mortgage bailout

[halik]

Text

Where's the public outcry for this program that gets no equity stake in the bailed out houses? fdic plan details If I mortgaged a house within my means and my neighbor went with interest only on a much bigger place, why is the government reducing his interest rate and not mine?

Much better idea would be to use the 25bil to take a stake in the property. So if you have a 300K balance and your house is worth 250K, government will take say 25% stake in your house and reduce your mortgage balance by 62K.

 

[JS80]

Originally posted by: halik
Text

Where's the public outcry for this program that gets no equity stake in the bailed out houses? fdic plan details If I mortgaged a house within my means and my neighbor went with interest only on a much bigger place, why is the government reducing his interest rate and not mine?

Much better idea would be to use the 25bil to take a stake in the property. So if you have a 300K balance and your house is worth 250K, government will take say 25% stake in your house and reduce your mortgage balance by 62K.

Because then the "homeowner" will just walk - no different than renting. It's a lose/lose situation, they just need to let the system flush out.

 

[halik]

Originally posted by: JS80

Originally posted by: halik
Text

Where's the public outcry for this program that gets no equity stake in the bailed out houses? fdic plan details If I mortgaged a house within my means and my neighbor went with interest only on a much bigger place, why is the government reducing his interest rate and not mine?

Much better idea would be to use the 25bil to take a stake in the property. So if you have a 300K balance and your house is worth 250K, government will take say 25% stake in your house and reduce your mortgage balance by 62K.

Because then the "homeowner" will just walk - no different than renting. It's a lose/lose situation, they just need to let the system flush out.

not exactly, all the upside potential is there. The government just reduced your mortgage with the caveat that you need to pay that amount back whenever you sell it. In the meanwhile your payment drops down and you don't have to foreclose.

I guess the percentage equity stake would have to be based on value somewhere between the current market and whatever the person paid, otherwise it's just like renting (unless house values go up over what the person paid)

 

[smack Down]

How about we let the bank foreclose and sell the property for what it is worth.

 

[JS80]

Originally posted by: halik

Originally posted by: JS80

Originally posted by: halik
Text

Where's the public outcry for this program that gets no equity stake in the bailed out houses? fdic plan details If I mortgaged a house within my means and my neighbor went with interest only on a much bigger place, why is the government reducing his interest rate and not mine?

Much better idea would be to use the 25bil to take a stake in the property. So if you have a 300K balance and your house is worth 250K, government will take say 25% stake in your house and reduce your mortgage balance by 62K.

Because then the "homeowner" will just walk - no different than renting. It's a lose/lose situation, they just need to let the system flush out.

not exactly, all the upside potential is there. The government just reduced your mortgage with the caveat that you need to pay that amount back whenever you sell it. In the meanwhile your payment drops down and you don't have to foreclose.

I guess the percentage equity stake would have to be based on value somewhere between the current market and whatever the person paid, otherwise it's just like renting (unless house values go up over what the person paid)

They are saying housing prices will not recover for a while (especially to bubble prices). It makes more sense to walk away from the house, rent and rebuild credit for 5 years and buy again than give up 25% equity.

Plus how will you even administer this? Government is not in the business of being RE investors. All in all it's a very bad idea. In fact, everything but foreclosing is a bad idea.

 

[NoStateofMind]

Originally posted by: smack Down
How about we let the bank foreclose and sell the property for what it is worth.

*gasp* Oh the humanity!

 

[chess9]

Originally posted by: smack Down
How about we let the bank foreclose and sell the property for what it is worth.

That will drive down home values, and will exacerbate the losses by banks and other lenders.

The truth is, there are exactly zero GOOD solutions to our current economic problems. Every solution has a large number of losers. Yet, Congress, and the Dems in particular, except for Kucinich and one or two others, seem to think we can be all things to all people and save everyone. It ain't gonna' happen. Serious pain has already happened but the big knives haven't even come out yet, or drawn blood.

-Robert