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Non-Tech : Bill Wexler's Trading Cabana -- Ignore unavailable to you. Want to Upgrade?

To: The Reaper who wrote (2742)	8/31/2007 3:42:48 PM
From: RockyBalboa	Respond to of 6370

Well, absent short term gains in politics, it is a blow to sincere people who after all, did make their payments and cut back on spending money for consumption... what will be offered to them? Cars and petrol for free? Tax breaks for good debtor behaviour? Why pay for the home if it is much cheaper to default and wait for government sponsored credit repair? The Japanese had a different approach for their mess in housing...they also slashed rates and let those commercial banks survive which had the bad apples on their books. Not pretty either but it worked. In essence, the Japanese and the BoJ took care that troubled banks did not default on too little book equity and then were allowed to carry assets (houses) without yield on their book for a decade or more until things settled down. In return those banks exercised strict discipline in their business dealings thereafter. Something which you can NEVER expect from a consumer addict... I also do not understand the FHA strategy. If the FHA pays for overpriced paper, it will likely be the taxpayer who foots the bill, like dilute the losses to homoeopathic levels...non-toxic. Unfortunately short term politics doesnt mix well with a long term strategy. But like an outgoing director, GW could not care less in few years.

To: The Reaper who wrote (2742)	8/31/2007 4:40:33 PM
From: RockyBalboa	Respond to of 6370

See here Message 23845069 Any subprime borrower who is still making payments after today is foolish. Fall behind on a mortgage, refinance into government subsidized loan and voila, you have a few hundred extra dollars per month, enough for an extra family outing to a steak place or a trip to Vegas.

To: The Reaper who wrote (2742)	8/31/2007 4:46:03 PM
From: RockyBalboa	Read Replies (1) \| Respond to of 6370

And here is a real good market based approach: Message 23844798 Borrowers would get a chance to stay in their homes, with an affordable mortgage and the opportunity, albeit reduced, to begin rebuilding some equity in the property and profiting from any appreciation in property values. They would also be able to avoid a big blot on their credit history. As for the lenders, this kind of workout would be of interest only in cases where the proceeds they would receive from foreclosure would be insufficient to pay back the full amount of the loan. That would be most obvious in the case of a loan that is larger than the value of the house that secures it. But this mechanism would also be worthwhile in cases where the house may be worth a bit more, because of the added cost of going through the foreclosure process, which can often amount to 15 to 20 percent of the value of a loan. In addition, the whole industry -- to say nothing of the whole economy -- would benefit if house values were not further depressed by a rash of foreclosures that suddenly puts hundreds of thousands of homes back on the market. This isn't an entirely original idea -- it's a second cousin of the "Brady bonds" used by the first Bush administration in the early 1990s to help solve the Third World debt crisis.