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Monday, October 10, 2011

Clinton Gets How to Fix the Mortgage Mess, Why Doesn't Obama?

Too bad we can't re-elect President Clinton because he has some idea's I think will help start turning our mortgage mess around. In an interview with Fortune managing editor Andy Serwer, President Clinton discusses what he would do fix the mortgage market.

I cannot emphasize the boost I think it would give the economy if we had a system that said to people whose homes are worth less than the mortgages that you can write down your mortgages to the value of your home if you can make the payment. Or you can extend the mortgage out and lower the interest rate. I don't think we ought to keep dumping these houses on the market when it's so depressed. Can we get the votes to do it? I don't know. When the Tea Party started, they seemed to object to the bailout of the big banks, claiming they were being protected from their own mistakes. That was true, but irrelevant. If a financial collapse had happened, we would have all paid. Now a lot of people argue that you shouldn't rewrite these mortgages because people never should have taken them out in the first place. There's a big problem with that thinking. The market is so depressed that it's hurting everyone else.

He hits it right out of the park. We're past the point of people loosing their homes because they took out loans that they shouldn't have. We are now facing homeowners just walking away because they are paying for something that isn't worth what they're paying for it. Is a McDonald's McDouble worth $1? Sure, but would you pay $30 dollars for one? Probably not and McDonald's would be out of business. Start making homeowners feel like they are getting there money's worth and have a feeling of wealth and things will turn around.

There are all these options and I don't think we ought to keep dumping these houses on the market right now when it's so depressed. I'd like to see them converted into rental property in an aggressive, comprehensive way, and let people rent it for the price of the utilities, the taxes, and the maintenance, just to maintain the housing stock. Then as the economy picks up, you can put it back on the market in a way that will support economic growth, not undermine it. That's what I think should be done.And in a larger sense, the market is so depressed that it's hurting everyone else. It used to be as a rule of thumb, people would say, well, if the mortgage is foreclosed on your block, it will drive down the value of your house because it's on your block, by 10, 15, 20%.But now there are so many houses that have been foreclosed on, it's driven down the value of almost everybody's houses, except -- let's talk about the upside -- the people that are in the prosperity centers of America: in Silicon Valley, in San Diego, in Orlando, and places where the economy is booming. Except for those places, this is a problem.I can't -- I think it would really get us going in a hurry if we could flush this out

Another great idea. Keep people in their homes, instead of dumping these unlived in, unkept homes on the market and driving property values down further is the way to go.

We must stop home prices from falling any further and keep homeowners in their homes. This is the only way we are going to claw our way out of this economic disaster.

(via CNN)

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