U.S. Government Mortgage Re-Evaluation Program

[kentuck]

Why not just ask the banks to put all their bad mortgages in a box and we will pick them up Monday morning. They will be allowed to write them off their books. The US Government Re-Evaluation Program will evaluate each of these mortgages individually and decide the best way to handle these new investments. Why pay the banks for these "bad" properties. We will simply take them off their hands. They lose nothing because they invested nothing. They get the opportunity to write it off as just a bad investment.

The government will contact each person on those mortgages and negotiate a way for them to keep their homes at a price that pays the principal only. We now own the homes and the banks get nothing except the right to write them off their books. The homes belong to us, not the banks. We drink your milkshake.

The government works with the people with the bad mortgages and the banks have nothing to say about it. The banks can make the decision: Do they want us to take the mortgages or not? Let's make it very simple for them. We are not going to pay for their mistakes.

[lapfog_1]

1. One basic problem

is that there isn't any "mortgage" (one financial instrument) anymore. All the mortgages were sliced up and diced up, combined with other securities as investment vehicles.

It will take a lot of "undoing" to put the original mortgage back together again.

[kentuck]

2. But the homeowner has a mortgage...

No matter how many times it has been sold and diced up. That is the only person we should even attempt to bail out.

[lapfog_1]

6. The homeowner has a debt service obligation to a

mortgage service company.

And, while I agree that it would be nice to stand on principle and only bail out the home-owners... there are a number of problems.

What about the home owners who pay their mortgages?

What about the home owners who already lost their homes to foreclosure?

But that isn't even the biggest problem. The biggest problem is that we (our government and our nation) are now a debtor society. Our government is maybe 9 or 10 Trillion in debt... and I wouldn't even know how to go about calculating how much in debt all of us and the companies we work for are. Not that we don't have some assets to offset the debt, but the assets we own are "ill-liquid" meaning they can't be easily converted into cash. So we (collectively) go to the world markets and borrow cash to keep things going. Right now, many of those people that lend cash to us (all of us, our banks, government, etc) ALSO have a lot of money tied up in things like AIG and the rest of them. What they effectively told us last week is that they won't lend us any more cash, at any interest rate, no matter what collateral we put up if we allow AIG to fail.

And so here we are.

[kentuck]

7. No doubt about it, we are in a mess...

So, in my opinion, the question is, who pays the piper? Just the taxpayers? Or do the banks and other criminals share in the burden? And how much should they be asked to pay? That is an important question, in my opinion. Where is FDR when you need him to save the capitalist system??

[Motown_Johnny]

3. They invested nothing???

When I bought my house, the previous owner was given money from the bank. I consider that their investment

[kentuck]

5. Have you foreclosed yet?

If not, then they made a good investment. They will make a lot of money off you before your home is paid off. Surely they don't expect to bat 1000 percent, do they??

[Junkdrawer]

4. Something like that...there's only $92.8 Billion in Subprime & Alt-A foreclosures

Here, you look for yourself:

Subprime: http://www.newyorkfed.org/regional/States_ABS_2008_08.xls

Alt-A: http://www.newyorkfed.org/regional/States_AltA_2008_08.xls

The total Subprime universe is $536 Billion. 10.7% are in Foreclosure. = $52.1 Billion
The total Alt-A universe is $727 Billion. 4% are in Foreclosure. = $40.7 Billion