[CA renter]

The Dow is likely to go to the 6,000-8,000 range even if they do bail everyone out, IMHO. These levels were absolutely expected by the long-time bears (with some expecting an even lower number).

Let’s imagine they let it go, then what??? The monetary system would shrink, housing prices would drop, stocks would drop and credit would become hard to get. Doesn’t sound so terrible to me. At least then, those with money would be able to step in and put a floor under everything (there is still a LOT of money out there). With the bailouts, the period of rising unemployment, falling stock and housing prices, social disorder, etc. will be prolonged…not avoided.

Let’s get this over with already!

[CA renter]

Underwrite every loan as if it’s a rental. Obviously, most of the loans that would quality would be foreclosures and short sales which are by definition closer to the “bottom.” This would alleviate, although not eliminate, a large part of the “further decline” issue.
——————–

That sounds fairly reasonable to me. To clarify:

1. Underwrite mortgages/appraise houses based on market rents (I’d suggest long-term averages to help keep short-term distortions from having too much influence).

2. Require at least 10% down, and it cannot be seller-financed.

How about that?

[CA renter]

Underwrite every loan as if it’s a rental. Obviously, most of the loans that would quality would be foreclosures and short sales which are by definition closer to the “bottom.” This would alleviate, although not eliminate, a large part of the “further decline” issue.
——————–

That sounds fairly reasonable to me. To clarify:

1. Underwrite mortgages/appraise houses based on market rents (I’d suggest long-term averages to help keep short-term distortions from having too much influence).

2. Require at least 10% down, and it cannot be seller-financed.

How about that?

[CA renter]

Underwrite every loan as if it’s a rental. Obviously, most of the loans that would quality would be foreclosures and short sales which are by definition closer to the “bottom.” This would alleviate, although not eliminate, a large part of the “further decline” issue.
——————–

That sounds fairly reasonable to me. To clarify:

1. Underwrite mortgages/appraise houses based on market rents (I’d suggest long-term averages to help keep short-term distortions from having too much influence).

2. Require at least 10% down, and it cannot be seller-financed.

How about that?

[CA renter]

Underwrite every loan as if it’s a rental. Obviously, most of the loans that would quality would be foreclosures and short sales which are by definition closer to the “bottom.” This would alleviate, although not eliminate, a large part of the “further decline” issue.
——————–

That sounds fairly reasonable to me. To clarify:

1. Underwrite mortgages/appraise houses based on market rents (I’d suggest long-term averages to help keep short-term distortions from having too much influence).

2. Require at least 10% down, and it cannot be seller-financed.

How about that?

[CA renter]

Underwrite every loan as if it’s a rental. Obviously, most of the loans that would quality would be foreclosures and short sales which are by definition closer to the “bottom.” This would alleviate, although not eliminate, a large part of the “further decline” issue.
——————–

That sounds fairly reasonable to me. To clarify:

1. Underwrite mortgages/appraise houses based on market rents (I’d suggest long-term averages to help keep short-term distortions from having too much influence).

2. Require at least 10% down, and it cannot be seller-financed.

How about that?

[CA renter]

Agree 100%.

If we get this done quickly, we can get to the point where side-lined money will be willing to get back in and start the economy anew. It will be more violent and painful at first, but we can get through it and not prolong the pain.

If we drag things out, unemployment will skyrocket, and jobs will be lost for many years to come, rather than just 1-3 years in a quicker correction, IMHO.

[CA renter]

Agree 100%.

If we get this done quickly, we can get to the point where side-lined money will be willing to get back in and start the economy anew. It will be more violent and painful at first, but we can get through it and not prolong the pain.

If we drag things out, unemployment will skyrocket, and jobs will be lost for many years to come, rather than just 1-3 years in a quicker correction, IMHO.

[CA renter]

Agree 100%.

If we get this done quickly, we can get to the point where side-lined money will be willing to get back in and start the economy anew. It will be more violent and painful at first, but we can get through it and not prolong the pain.

If we drag things out, unemployment will skyrocket, and jobs will be lost for many years to come, rather than just 1-3 years in a quicker correction, IMHO.

[CA renter]

Agree 100%.

If we get this done quickly, we can get to the point where side-lined money will be willing to get back in and start the economy anew. It will be more violent and painful at first, but we can get through it and not prolong the pain.

If we drag things out, unemployment will skyrocket, and jobs will be lost for many years to come, rather than just 1-3 years in a quicker correction, IMHO.

[CA renter]

Agree 100%.

If we get this done quickly, we can get to the point where side-lined money will be willing to get back in and start the economy anew. It will be more violent and painful at first, but we can get through it and not prolong the pain.

If we drag things out, unemployment will skyrocket, and jobs will be lost for many years to come, rather than just 1-3 years in a quicker correction, IMHO.

[CA renter]

davelj,

I think your plan is excellent (much like what I proposed in the “call your representative” thread). 😉

The only thing I would disagree with is the loans for new mortgages. The govt should not be in the mortgage business, as it will continue to distort prices. Besides that, many of the current homes on the market will still lose over 30%, and the 10% down will lead us to the same problems we have today, except the govt is directly on the hook.

I think there is plenty of money out there (both to buy houses and to make mortgage loans), but we are not willing to pay prices that were determined by specuvestors with Monopoly money.

There is lots of evidence that the hardest-hit areas are already seeing huge increases in sales volume and multiple bids. We need to get there with the rest of the market, and there’s nothing that can do that better than letting prices drop to such levels that people who have something to lose (significant down payments and good credit) will step up to the plate.

We need tighter money, and that is a GOOD thing. This whole notion that debt = wealth needs to be put to rest, permanently. Debt is the means used to transfer money from the poor/weak to the strong/wealthy. Self-liquidating debt is okay, but consumer debt (including mortgages) should be wound-down significantly, IMHO. Let the poor people save for a change.

[CA renter]

davelj,

I think your plan is excellent (much like what I proposed in the “call your representative” thread). 😉

The only thing I would disagree with is the loans for new mortgages. The govt should not be in the mortgage business, as it will continue to distort prices. Besides that, many of the current homes on the market will still lose over 30%, and the 10% down will lead us to the same problems we have today, except the govt is directly on the hook.

I think there is plenty of money out there (both to buy houses and to make mortgage loans), but we are not willing to pay prices that were determined by specuvestors with Monopoly money.

There is lots of evidence that the hardest-hit areas are already seeing huge increases in sales volume and multiple bids. We need to get there with the rest of the market, and there’s nothing that can do that better than letting prices drop to such levels that people who have something to lose (significant down payments and good credit) will step up to the plate.

We need tighter money, and that is a GOOD thing. This whole notion that debt = wealth needs to be put to rest, permanently. Debt is the means used to transfer money from the poor/weak to the strong/wealthy. Self-liquidating debt is okay, but consumer debt (including mortgages) should be wound-down significantly, IMHO. Let the poor people save for a change.

[CA renter]

davelj,

I think your plan is excellent (much like what I proposed in the “call your representative” thread). 😉

The only thing I would disagree with is the loans for new mortgages. The govt should not be in the mortgage business, as it will continue to distort prices. Besides that, many of the current homes on the market will still lose over 30%, and the 10% down will lead us to the same problems we have today, except the govt is directly on the hook.

I think there is plenty of money out there (both to buy houses and to make mortgage loans), but we are not willing to pay prices that were determined by specuvestors with Monopoly money.

There is lots of evidence that the hardest-hit areas are already seeing huge increases in sales volume and multiple bids. We need to get there with the rest of the market, and there’s nothing that can do that better than letting prices drop to such levels that people who have something to lose (significant down payments and good credit) will step up to the plate.

We need tighter money, and that is a GOOD thing. This whole notion that debt = wealth needs to be put to rest, permanently. Debt is the means used to transfer money from the poor/weak to the strong/wealthy. Self-liquidating debt is okay, but consumer debt (including mortgages) should be wound-down significantly, IMHO. Let the poor people save for a change.

[CA renter]

davelj,

I think your plan is excellent (much like what I proposed in the “call your representative” thread). 😉

The only thing I would disagree with is the loans for new mortgages. The govt should not be in the mortgage business, as it will continue to distort prices. Besides that, many of the current homes on the market will still lose over 30%, and the 10% down will lead us to the same problems we have today, except the govt is directly on the hook.

I think there is plenty of money out there (both to buy houses and to make mortgage loans), but we are not willing to pay prices that were determined by specuvestors with Monopoly money.

There is lots of evidence that the hardest-hit areas are already seeing huge increases in sales volume and multiple bids. We need to get there with the rest of the market, and there’s nothing that can do that better than letting prices drop to such levels that people who have something to lose (significant down payments and good credit) will step up to the plate.

We need tighter money, and that is a GOOD thing. This whole notion that debt = wealth needs to be put to rest, permanently. Debt is the means used to transfer money from the poor/weak to the strong/wealthy. Self-liquidating debt is okay, but consumer debt (including mortgages) should be wound-down significantly, IMHO. Let the poor people save for a change.

[Author]

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