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Strategies & Market Trends : The Residential Real Estate Crash Index -- Ignore unavailable to you. Want to Upgrade?

To: Travis_Bickle who wrote (106094)	2/22/2008 9:09:25 AM
From: Hawkmoon	Read Replies (3) \| Respond to of 306849

Bank of America, which is in the process of acquiring Countrywide Financial and has potentially huge exposure, has circulated a proposal to create a new federal agency that would buy vast quantities of delinquent mortgages at a deep discount and replace them with fixed-rate federally guaranteed loans. I have mixed feelings about BofA's plan, based upon cursory analysis. However, I can see how having the Gov't step forward and acting to place a "bid" under the price of these mortgages might create a floor from which private investors can set a value for them. But as someone previous showed, Fannie Mae has been engaged in some controversial lending practices to non-qualified borrowers, so I'm truly afraid of increasing the degree of moral hazard until we're confident we know where the bones are all buried. But then again, what choice do we have? We can let the RE bubble pop and implode uncontrollably, or attempt to unwind it gradually. After all, the bubble didn't happen overnight and should not be permitted to collapse over a short time span.. (even though that would set the stage for a bottom and recovery). Hawk