By Bob Ivry
Barney Frank, U.S. representative from Massachusetts, chairs a hearing of the House Financial Services Committee in Washington, April 9, 2008. Photographer: Dennis Brack/Bloomberg News
Link:
http://www.bloomberg.com/apps/news?pid=20601103&sid=aKlXIcX4YHzk&refer=news
Comments: We must recognize there is a group of people who are beyond help right now and that a certain percentage of homeowners and speculators were reckless regarding their home purchase.
What can we do?
- Understand: solutions need to be formulated at the Federal, State, and Local levels that will motivate free market participates to embrace the new programs.
- Cooperation: and linkages to solutions at the Federal, State, and Local level will greatly enhance success.
- Market Solution: involves a refinanced loan not a rewritten old loan.
- Many Second Liens: stakeholders offered Piggyback Loans which were highly speculative an very lucrative. This loan helped the homeowner avoid Mortgage Insurance (MI).
- Better Definition: of whom do you assist, for how much, and for how long.
Food for thought: Many of the recommendations are trying to use mortgage tools that don't have the capacity to solve the problem. A vertically and horizontally integrated program using newly created MBS instruments could go a long way in discouraging the fast buck speculators and encouraging market investors to continue to support MBS and Structured Market Environment. It can be done in a timely manner with available resources.
Best Regards,
Jim
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