[quote=no_such_reality]Actually, banks currently aren’t marking to market.
Unless that’s changed, that was the dirty part of the bail-out. The banks got to pretend that their bad loans were good loans.
Efficiency in the foreclosure process, squeezing out the upside down delinquents will improve the economy, by driving the housing market to a real bottom.
Real bottom, real growth as the economy absorbs the housing then puts housing back into productive use and regains construction.
We do that at the expense of a bunch of artificial paper and people pretending that junk bond equivalent of a mortgage is AAA. And continuing to pretend that the squatter is a home owner.
No sustainable economic growth is possible to be built of the house of cards we have today.[/quote]
Nope. Banks have been required to reclassify debt as soon as it’s delinquent. Including taking reasonable impairment charges. That hasn’t changed for decades. Keep in mind that the vast majority of mortgages are not owned by banks.
You’ll have to explain in detail how driving the housing market to a real bottom (whatever that means) will help things. It’s one of those things that has been repeated by idealogues for so long that some take it as absolute fact, despite no evidence nor logic that make it so.
Builders are building. For the first time in 4 (maybe 5?), new home construction is adding to GDP growth.
That whole “house of cards” is another buzz phrase that idealogues like to throw around. The economy is made up of dozens of different segments. Some of them have been built on bubbles in the past, and are sure to be again in the future. Housing was one of them. We went through a steep correction. The aftershock of that correction is still with is. But housing is no longer a “house of cards”. Price to rent ratios and inflation adjusted values are back to within historical norms.
Assigning neither credit nor blame for how we got here, the resolution of the mortgage crisis has worked itself out, almost to perfection. The softest landing that could have occurred. It’s not over, and a lot could still go wrong. But housing prices are now back to a very delicate normal.
