NEW YORK (CNNMoney.com) — A proposal to bail out subprime mortgage borrowers who are at risk of foreclosure was floated at a Senate Banking Committee hearing Thursday.
Senator Chris Dodd, the committee chair, said he is working to create a Home Ownership Preservation Corporation, which would purchase mortgage securities that are backed by at-risk, subprime loans from lenders and investors.
This corporation would give these lenders and investors a better price for the securities than they would get if the properties backing them were put through foreclosure.
Additionally the loans on these properties would be restructured so that borrowers could afford the new payments and remain in their homes.
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This is on the right track! The government needs to get the properties off the market; stop trying to mess with mortgages and inflate housing! Keep the bailout isolated to helping individuals, where it belongs!
I’ll go as far as saying this is a step in the right direction but only because it focuses on the non functioning debt markets.
I’m not crazy about having the taxpayer hold the bag for the banks and investment companies. This transfers the risk from them to the government (us). Unless I saw people who are most responsible for this debacle, go to jail for the rest of their lives, then I don’t think I could go along with this in it’s present state.
It also sounds too cheap. 25 Billion in seed money seems minuscule compared to the trillions in bad debt out there.
None the less, any aid to homeowners should be means tested. Not on a most needy basis but on a basis whereby the homeowners who are financially strongest, get the aid first. So we should start handing out the help to homeowners with the most equity first and help those homeowners who can PROVE a capacity to repay the modified mortgage first.
The money will run out long before being able to bail out 100% ltv homeowners who have nothing to lose, so to speak, except a place to live.
No, no, no, no, no!! No bailout for owners or Wall Street. People need to live with the consequences of their choices – period.
Well, right now we’re bailing out the banks and printing them money so cool like it’s day old newspaper – all the while our mighty dollar goes straight down the drain. I’m afraid the pot’s already been stirred, then again – that’s what got us here in the first place.
This may or may not be a good idea, but when a pipe breaks, the first thing you should do is turn off the water before you start mopping up the spill. Option ARMs are still legal. Stated Income loans are still legal. Stated Income Option ARMs are still legal. WTF? He should focus first on legislation requiring that lenders obtain written documentation of borrowers’ reasonable ability to pay on ALL loans, not just rely on the Fed’s recent bogus rules that only apply to (now non-existent) so-called “higher-priced loans”. C’mon president Dodd, with all due respect, pull your head out.
I wonder where the heck is the money going to come from? Oh yeah! just print more money or let’s tax some more, bye bye dollar.
Does the purchase of countrywide by Bank of America have any effect on this, positive or negative?