How To Fix The Housing Crisis

[howardroark]

As many free market economists have predicted, preventing bank failures has prevented a badly needed market correction, which in turn has caused an anemic "recovery." Allow banks to fail, so investors will scoop up their assets (including mortgage-backed securities) at firesale prices and will renegotiate with the homeowners to make these loans "performing" again.
________________________ _

How to Fix the Housing Crisis
Mises Daily: Friday, November 04, 2011 by Doug French

The real help for underwater homeowners will only arrive when Fannie, Freddie, and the rest are allowed to fail. The equivalent of a chapter 7 bankruptcy filing (liquidation) would put these underwater loans out for bid in the market place. Would our mythical mortgage in Salinas, secured by a house worth $187,000, trade for $205,700? Not hardly.

No one can get a loan for a 110 percent of value in this market, let alone 125 percent, or 100 percent for that matter. Those looking for mortgages should expect to put 20 percent down. Values in a bankruptcy sale would reflect this reality and then some. Based on the liquidation prices received by the FDIC and other distressed debt sellers, this mortgage paper would likely be scooped up for half or a third of the home's value.

Buyers of the paper would immediately negotiate with borrowers to create loans that are conforming (80 percent LTV) and performing.

Read more at... http://mises.org/daily/5805/How-to-Fix-the-Housing-Crisis

[Soul Crusher]

you mean actually follow the free market?   Oh god no!!!   we could never do that!!!!    

[bears]

you mean actually follow the free market?   Oh god no!!!   we could never do that!!!!    

and how are low income families supposed to come up with 20%?  we need to loosen up the regulations to get these people into homes.  It is THEIR RIGHT AS AMERICANS TO HAVE HOMES!!!  These banks need to work with the low income families and we need Congress to force them to do it because we care about poor people.  It's a win win for everyone!  Also we can get all the guys who can't find jobs because they can't read or write to become loan officers.  I have all of this figured out.  I mean what could go wrong?

[howardroark]

and how are low income families supposed to come up with 20%?

Here's an idea: rent an apartment if you can't afford a house.

But even if you don't rent... the main reason why people can't afford a home anymore is because of the housing bubble. The Fed printed money and the government directed that new money with various incentives toward housing - the result was an explosion in housing prices that made housing unaffordable for many Americans.

The proper solution is to allow housing prices to fall again. The reason why they haven't is because of the government bailouts of banks... you let the banks fail, then mortgages will be renegotiated and housing prices will fall until they become affordable again.

  we need to loosen up the regulations to get these people into homes.

I'm all for getting rid of as many regulations as possible.

  It is THEIR RIGHT AS AMERICANS TO HAVE HOMES!!!  These banks need to work with the low income families and we need Congress to force them to do it because we care about poor people.

But THAT is PRECISELY what caused the housing bubble, the financial crisis, and unaffordable housing problem in the first place!

It's a win win for everyone!

Taking money from Peter to give to Paul is not a win-win for everyone.

Also we can get all the guys who can't find jobs because they can't read or write to become loan officers.  I have all of this figured out.  I mean what could go wrong?

Oh fuck. I just realized you're a troll and I spent all this time writing this reply... Oh well, I guess I'll just click "post." 

[240 is Back]

peter schiff rents.  he says you should too.

[bears]

Here's an idea: rent an apartment if you can't afford a house.

But even if you don't rent... the main reason why people can't afford a home anymore is because of the housing bubble. The Fed printed money and the government directed that new money with various incentives toward housing - the result was an explosion in housing prices that made housing unaffordable for many Americans.

The proper solution is to allow housing prices to fall again. The reason why they haven't is because of the government bailouts of banks... you let the banks fail, then mortgages will be renegotiated and housing prices will fall until they become affordable again.

I'm all for getting rid of as many regulations as possible.

But THAT is PRECISELY what caused the housing bubble, the financial crisis, and unaffordable housing problem in the first place!

Taking money from Peter to give to Paul is not a win-win for everyone.

Oh fuck. I just realized you're a troll and I spent all this time writing this reply... Oh well, I guess I'll just click "post." 

yeah i was being sarcastic. 

[bears]

yeah i was being sarcastic. 

but you see how easy it is to fall into this line of reasoning when writing bills into law?  on the surface it always sounds like it makes sense to the bleeding hearts who have no economic intelligence nor any knowledge of tax policy but it's exactly this type of legislation that destroys economies. 

[Roger Bacon]

It is THEIR RIGHT AS AMERICANS TO HAVE HOMES!!! 

 

RIGHT to free Health Care, RIGHT to a Home, Right to Cell Phones.  How about we focus on preserving the stuff in our Bill of Rights before we move onto peoples Right to have homes.

[Roger Bacon]

OH!!

haha...