I was thinking that very thing when this first bill came up...how the frik can the very ones that cause it all of the sudden have the answers.
Which leads me to this question.....
Now I understand that there are more things at work than just this that I am going to ask....but...
Couldn't the government have simply adressed the housing problem with this...?
Make ALL the banks that were in trouble with bad loans , simply refinance EACH loan at a low 30 year fixed rate (instead of arm's) and not charged closing costs. Give the home owners that could afford it that chance and tell them this is all you get.
and MAKE the banks do it.....those that could afford those new deals could stay out of forclosure and those that couldnt were/nt ever going to be able to anyway.
Seems like that would have put ALOT of money BACK in play and even if ther WAS still a need for a bailout it would certainly have been alot less wouldn't it?
You're making the GIANT and WRONG assumption that the majority of these foreclosed homes were anything but a commodity. The vast majority of people getting burned were trading homes like they were baseball cards.
Through the fallacious house value inflation, people were buying (for example) $200,000 real value homes, for upwards of $500,000. A lot of them did it on a subprime mortgage with the MASSIVE assumption that the price of homes was only going to go up. So these people would hold onto it for a little while, pay relatively low mortgage amounts and then sell it later for a tidy profit.
When the prices crashed, they could no longer sell it without suffering a major loss. A refinance will not solve the problem. The refinance will not erase the past and make it so that these people only owed $200,000 plus interest on the homes. They still owed $300,000 plus interest MORE than what the houses are now selling for. Couple this with the fact that the people couldn't afford to get past the interest only part of the mortgage, putting a real mortgage will especially not make it so that they are suddenly able to afford it.
The only solution that is even partway palatable is to let all those responsible parties crash and burn. That includes the stupid borrowers, the bad lenders, and the crooked politicians.