Latest: Negative Equity Certificates

[stansd]

I’ll go on record saying this is the first good bailout idea I’ve seen. It will lubricate the market by allowing the banks to tap into some of the potential value they are giving up by writing down a loan. Why should a home buyer who got in over his or her head get a payment break now because they can’t afford it and have the potential to reap a large gain down the road.

This increases the odds of a workout and also prevents a maverick borrower from excercising a put option from the bank while reaping all the upside.

I think it’s a great idea-good for all. Too many on this board are out for pain in the market and pain for individuals with impunity. If there is a reasonable economic solution for all, it should be pursued.

Where I do part company, however, is the part where the government buys the loan. I think the negative equity certificate is a nice idea to help the banks work things out., but that the government should avoid a bailout of the loan itself-nanny state versus market innovation.

Stan

[cr]

The problem with any bailout effort regardless of whether it truly helps the homeowner or bank, is it encourages people who can afford their payments to stop making them so they can get a handout.

[cr]

The problem with any bailout effort regardless of whether it truly helps the homeowner or bank, is it encourages people who can afford their payments to stop making them so they can get a handout.

[cr]

The problem with any bailout effort regardless of whether it truly helps the homeowner or bank, is it encourages people who can afford their payments to stop making them so they can get a handout.

[cr]

The problem with any bailout effort regardless of whether it truly helps the homeowner or bank, is it encourages people who can afford their payments to stop making them so they can get a handout.

[cr]

The problem with any bailout effort regardless of whether it truly helps the homeowner or bank, is it encourages people who can afford their payments to stop making them so they can get a handout.

[HereWeGo]

I agree, Stan. It’s not a bad idea, if for no other reason than the judiciary is not newly injected into the market.

Allowing cram-downs, on the other hand, is fine in theory, but given the current state of the credit markets and the MBS markets, not a real good idea at the current time. If the Congress continually looks askance at MBS investors, eventually those investors will take the hint.

[HereWeGo]

I agree, Stan. It’s not a bad idea, if for no other reason than the judiciary is not newly injected into the market.

Allowing cram-downs, on the other hand, is fine in theory, but given the current state of the credit markets and the MBS markets, not a real good idea at the current time. If the Congress continually looks askance at MBS investors, eventually those investors will take the hint.

[HereWeGo]

I agree, Stan. It’s not a bad idea, if for no other reason than the judiciary is not newly injected into the market.

Allowing cram-downs, on the other hand, is fine in theory, but given the current state of the credit markets and the MBS markets, not a real good idea at the current time. If the Congress continually looks askance at MBS investors, eventually those investors will take the hint.

[HereWeGo]

I agree, Stan. It’s not a bad idea, if for no other reason than the judiciary is not newly injected into the market.

Allowing cram-downs, on the other hand, is fine in theory, but given the current state of the credit markets and the MBS markets, not a real good idea at the current time. If the Congress continually looks askance at MBS investors, eventually those investors will take the hint.

[HereWeGo]

I agree, Stan. It’s not a bad idea, if for no other reason than the judiciary is not newly injected into the market.

Allowing cram-downs, on the other hand, is fine in theory, but given the current state of the credit markets and the MBS markets, not a real good idea at the current time. If the Congress continually looks askance at MBS investors, eventually those investors will take the hint.

[Arty]

Don’t worry guys, Obama will come to the rescuse with his gifts to the poor housing plan.

Don’t worry, Bush has already done a well good job at that :P.

[Arty]

Don’t worry guys, Obama will come to the rescuse with his gifts to the poor housing plan.

Don’t worry, Bush has already done a well good job at that :P.

[Arty]

Don’t worry guys, Obama will come to the rescuse with his gifts to the poor housing plan.

Don’t worry, Bush has already done a well good job at that :P.

[Arty]

Don’t worry guys, Obama will come to the rescuse with his gifts to the poor housing plan.

Don’t worry, Bush has already done a well good job at that :P.

[Author]

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