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Strategies & Market Trends : 2026 TeoTwawKi ... 2032 Darkest Interregnum
GLD 383.15+0.8%Nov 26 4:00 PM EST
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To: TobagoJack who wrote (51968)7/1/2009 9:40:38 PM
From: Elroy Jetson  Read Replies (1) of 218043
 
They're attempting to slow down the avalanche of home foreclosures by lowering the interest rate on people whose home is worth more than their mortgage.

If the lower rate can keep some people paying their mortgage rather than walking and dumping the loss on the government, it will save the taxpayer some money. This offer will cost nothing and ultimately will apply to very few people.

Japan offered these style loans through their treasury acting as the Home Lending Organization. This likely slowed down the decline of home prices in Japan, but after 16 years of declining home values the price decline was probably exactly the same.

Back in the crazy days some lenders, like General Motors' subsidiary Ditech Home Loans, offered cash-out mortgages for 125% of home, betting on future housing appreciation. That money created spending equal to 106% of total national income, spent on crap from China and granite kitchen counters in every cheap home.
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