Cut to the chase - it would be cheaper to guarantee every single DEFAULTED mortgage

[Phoebe Loosinhouse]

and take title to the property in the name of the US taxpayers and sell it through some new entity. The US could suddenly have a wonderful new inventory of affordable housing that they could co-operate with the cities and towns to make available. They could retain partial ownership and equity share, etc. There's ALL kinds of good things that could happen to the reclaimed housing stock.

Screw all this other BS.

(But it's not about the mortgages, they just don't want you to know that)

[dkf]

1. I'd be curious to know if that would work.

Like how the FDIC takes over every failed bank...

[Extend a Hand]

3. FDIC "insurance", does it even exist?

http://seekingalpha.com/article/95129-fdic-insurance-fund-it-doesn-t-actually-exist

When FDIC head Shelia Bair says her agency might have to bolster the FDIC's insurance fund with Treasury borrowings to pay for the new spate of bank failures, a lot of us, this 40-year banking veteran included, assumed there's an actual FDIC fund in need of bolstering.

We were wrong. As a former FDIC chairman, Bill Isaac, points out here, the FDIC Insurance Fund is an accounting fiction. It takes in premiums from banks, then turns those premiums over to the Treasury, which adds the money to the government's general coffers for "spending . . . on missiles, school lunches, water projects, and the like."

The insurance premiums aren't really premiums at all, therefore. They're a tax by another name.

Actually, it's worse than that. The FDIC, persisting in the myth that its fund really is an insurance pool, now proposes to raise the "premiums" it charges banks to make up for the "fund's" coming shortfall. The financially weakest banks will be hit with the biggest tax hikes.

[dkf]

5. The supposed FDIC fund is going to the treasury when it runs out of $ anyway.

[Extend a Hand]

2. The talk about goverment insurance for money market funds

means the end is nigh. I wonder how much longer the duct tape and bailing wire is going to hold.

:nuke:

[dkf]

4. That is because the institutions were freaking out.

Its funny because its the big guys who are scared out of their wits. The little guys are the calm ones.

[BlooInBloo]

6. (a) That would maintain housing (over)prices, (b) What about *projected* future defaults?

[Phoebe Loosinhouse]

7. The mortgages have a set value.

I am saying make the mortgage holder whole at time of default. Screw future interest - let them deal with that. I am saying re-imburse for out of pocket expenses in buying back that mortgage. Turn that house into part of the USA Inventory. Maybe you can market to people like nurses, firemen, policemen, etc. or turn it to the cities for temporary housing for families in crisis, or make group homes, or shared senior living, heck, I can think of a lot of good things you could do with that housing stock

Yes, cover future defaults. They roll in on different waves, so they are nicely staggered. Say you are covering all mortgages written up to January 2008 or whenever the underwriting guidelines changed back to sanity.