Option 4

18 USC 1014

Let the prices of homes return to what they would have been had the funny lending terms not been used to artificially inflate the valuations of collateral held by banks.

The deceived borrows get to walk and the banks get to make corrections to the valuation of the collateral for loans they knew would transition into non-performing loans.

The sellers get their house back, and have to return their receipts of cash (their routinely untaxed capital gains).

Could anyone really object to the restoration of a natural equilibria between private wages and home values, in the interest of affordability? The cost of maintaining an artificial price support system for homes is higher than the alternatives.

The public cost would be the prosecution of 10s of thousands of folks who violated this code provision. It is cheaper, I suppose, to just grant the so-called professionals a blanket pardon.

DIANE’s comment is on the right track.

This one-size-fits-all ’solution’ (also used advisedly) can’t help but also bail out the crowd who *knowingly* got in over their heads — they’re known as speculators and flippers (including those charming rogues on HGTV’s “Flip This House”). Those of us who bought a house we could afford, and who play by the rules, have every right to decry a bailout.

ALL THAT SAID — Some of you may not like what John the mortgage broker says, but he’s right: investors who bought the investment paper backed by these loans did so under certain guidelines that specified a rate of return for them. Now, Uncle Sam’s gonna yank the rug out; leaving THEM holding the bag. So… d’you suppose those investors will rush to buy paper the next time, knowing they might again be forced to lose money? If they don’t, lenders won’t have the cash flow to make more mortgages. It’s called “liquidity,” and without it — well, we’re seeing NOW what happens when there’s a liquidity crunch. It’ll get worse. Much worse.

Unless someone’s gonna investigate every single borrower to determine whether they’re ‘worthy’ of a bailout (with the same competence as, say, Social Security? DMV?) there’s really no good way out of this mess — only less-bad ones.

Sounds like you brokered your fair share of sub-primes in your day?

Now you foresee “catastrophe” and “stampede” because you’re worried Wall Street will no longer buy the garbage guys like you bundled and sold to them a few short years ago? Because nobody can get blood from a stone.

Please. You sound angrier at the borrowers who agree to continue their payments rather than the ones who would simply walk away in foreclosure. The debt holders here are doing this only because they now know that they should be so lucky as to receive the entry rates on these loans rather than foreclose.

The only disappointment here is that the middlemen who’ve already made their money by tying a bow on these shakey loans won’t face any of the cost. As if getting away with that weren’t enough, listen to them now whine about the dried-up future opportunty to pull the same scam, which is the necessary market corrective. Classic “Glengary Glen Ross” logic.

As they used to say, man, you’re part of the problem.

WTF?

Reading between the lines, you think the dumb n1ggers got what they deserved and should be kept in their place like the other serfs, is that right?

No wonder Jesse Jackson hates you guys.

“Therefore, Jew,
Though justice be thy plea, consider this,
That, in the course of justice, none of us
Should see salvation: we do pray for mercy;
And that same prayer doth teach us all to render
The deeds of mercy.”

Keep the banks open, and don’t repeat 1929-1932. Otherwise, we’ll end up with a repeat of 1932-1936.

The second stampede, however, will be even worse, as Wall Street investors completely abandon the Collateralized Debt Obligation market. This legislation is essentially pulling the stopper and allowing whatever liquidity is left in the market to run down the drain. Borrowing costs will go up for everyone, thanks to the deadbeats and their government benefactors.

And you thought Republicans believed in free market forces.

If you think past the range of the moment, you’ll realize why this will lead to the next even-bigger crisis.

If you think in principles, you will realize why taking money from people by force is wrong, and that the ends don’t justify the means no matter how needy the recipient is!

The lenders speculated too.

Disturbingly, is the program limited only to those with “spotty” credit histories? How is that line drawn?

But given the situation the choices are:

1 - Bail out the homeowners, and reduce the losses to the banks.

2 - Don’t bail out the homeowners, but bail out the banks who are stuck with the mortgages.

or

3 - Don’t bail out the homeowners OR the banks, and let homeowners go bankrupt and let the banks fail.

Of those three, option 1 seems to the only reasonable choice. If you don’t do that, Option 2 becomes a bailout for Wall Street. Option 3 would be more costly to Main Street than either of 1 or 2.