Consensus On The Need For HOLC

A few weeks ago, Hillary Clinton said:

[W]e need a government entity, a modern-day Homeowners Loan Corporation, referred to as HOLC -- H-O-L-C . . . Now, I personally believe and was among the very first to suggest that a HOLC, a Homeowners Loan Corporation, could be a preferable way of unfreezing and beginning to fix our struggling mortgage market.

Last night, Barack Obama said:

The middle-class need a rescue package. . . . It means help for homeowners so that they can stay in their homes.

Last night, John McCain said:

As president of the United States . . . I would order the secretary of the treasury to immediately buy up the bad home loan mortgages in America and renegotiate at the new value of those homes -- at the diminished value of those homes and let people be able to make those -- be able to make those payments and stay in their homes.

So now that we have all agreed, it is time to move to implementation of a new HOLC.

More . . .

A friend of mine has his own plan:


THE PROBLEM: The American economy is on the brink of a financial melt down that has been caused by a failure of the housing market. Our country needs a comprehensive solution to this problem that addresses the issues of both Main Street and Wall Street.

From Main Street’s perspective the problem is that housing prices, which were only supposed to go up, have fallen dramatically and continue to fall. Falling prices have exposed weaknesses in mortgage lending – an industry that has relied on price increases to hide poor lending practices. Extremely low down payments and complex interest rate structures that allowed buyers to acquire houses beyond their means have led to defaults and foreclosures. Main Street is hurting.

From Wall Street’s perspective the underlying problem is that mortgage backed securities have gone down in value, and even at dramatically reduced prices investors are unwilling to step forward to purchase securities. Furthermore, financing for mortgage backed securities is increasingly difficult to obtain, which forces sales, which exacerbates the problem. Wall Street is hurting.

THE SOLUTION: The Mortgage Rescue Plan outlined below encourages mortgage investors to voluntarily lower the outstanding principal amount as well as the stated interest rate on homeowner’s existing mortgages in exchange for a government guaranty of the modified mortgage. In exchange for these more advantageous mortgage terms, a homeowner would agree to share any future appreciation of his home (realized upon subsequent sale) with the mortgage investor and the government, in accordance with some equitable sharing rule.

This solution is simple, comprehensive and can be implemented quickly and inexpensively. It immediately lowers principal and interest payment on mortgages to allow homeowners to avoid defaults and foreclosures and to give them peace of mind that homeownership is a viable and valuable American dream. Simultaneously, it immediately liquefies mortgage-related securities allowing them once again to trade actively and be easily financed. Finally the solution is voluntary on the part of mortgage investors and homeowners and involves minimal government intervention.

THE PLAN: The government would announce that it is prepared to guarantee the repayment of principal and interest by homeowners if mortgage investors are willing to modify the terms of outstanding mortgages by reducing the principal amounts as well as the stated interest rates, and if homeowners are willing to share some of the future appreciation in value of their homes (realized upon sale). Here is how it would work:

After discussions with the government to set the terms (in particular the loan amount), the mortgage investor, if he so chooses, would send a term sheet to the homeowner describing the proposed modified mortgage. Upon receipt of the term sheet, it would be up to the homeowner to accept or reject the proposal.

New Loan Amount: A reduced loan amount would be proposed by the mortgage investor and approved by the government. The allowed reduction in loan amount should be based on published data telling how much housing prices have fallen in various regions of the country since a particular mortgage was written. It would be the government’s role to work with the mortgage lenders to see that reductions were sufficient to have the desired economic impact and appropriately sized to avoided moral hazard issues. All principal repayments on the new mortgages would be guaranteed by the government.

New Interest Rate: The rate could be either fixed or floating plus a spread. This spread would be divided between the government (as an insurance premium), the servicer (as a servicing fee), and the mortgage investor (as spread income). All interest payments on the new mortgages would be guaranteed by the government.

Loan Maturity and Repayment Schedule:

Traditional maturities would apply and standard principal repayment schedules would be implemented.

Distribution of Funds upon Resale: Funds would go first to the government (to pay off the principal of the new mortgage), second to the homeowner (to reimburse him for his down payment in his original loan and improvements made to the house, if any) and to the mortgage investor (to make up the lost loan balance), and third to the homeowner and the government (to share residual profit). There are many possible equitable sharing rules for parts two and three.


1. What does this Mortgage Rescue Plan do that the Administration’s plan does not do?

This Mortgage Rescue Plan does something immediate and concrete for homeowners – it decreases mortgage loan amounts and interest rates, which decreases principal and interest payments thereby increasing the probability that homeowners can stay in their homes and neighborhoods.

The Administration’s Plan, provides no direct benefit to homeowners. Somehow the benefit of “fixing the financial markets” is supposed to trickle down to homeowners.

This Mortgage Rescue Plan does something immediate and concrete for mortgage investors – it provides government guarantees for vast quantities of mortgage backed securities thereby stabilizing prices and adding tremendous amounts of liquidity to the financial system.

The Administration’s Plan takes some illiquid securities off the market temporarily in the hopes that this action will “un-seize” the rest of the market.

2. How much will the Mortgage Rescue Plan Cost?

Besides administrative costs, there would be no initial outlay of funds by the government under this plan. A fund would be established to cover costs associated with defaults and foreclosures. It would have its own capitalization (see question #5 below) and would be receive as additional funding the portion of the interest rate spread allocated to the government and the government’s right to receive amounts upon sale. The final cost to the government is not determinable, but if this Mortgage Rescue Plan is successful it should stabilize housing prices which would minimize future government outlays.

3. How will administration under the Mortgage Rescue Plan work?

The initial role of the government under the Mortgage Rescue Plan would be to encourage mortgage investors and homeowners to participate and to approve principal reductions that encourage economic growth. Over time there will be defaults and foreclosures, and procedure (much like those used by FNMA and Freddy Mac) will need to be developed to deal with them.

4. How long would it take to make the Mortgage Rescue Plan operational?

Once approved by Congress the plan could be operational in 90 days – 60 days for mortgage investors to develop and send out term sheets to homeowners and 30 days for homeowners to accept. In the interim, the Government could continue to lend funds to mortgage investors to support their illiquid securities.

5. How could the Government implement the Mortgage Rescue Plan?

One way to implement the MRP would be to establish an entity, which for working purposes we will call the “Mortgage Refinance Entity” (the “MRFE”). It could be housed in the Treasury Department, much like the Federal Financing Bank, or possibly as a division of the Federal Financing Bank.

The MRFE would have an initial capitalization agreed to by the Congress and the Administration. It would be the entity that would offer to the Investor the new mortgage security in exchange for an existing one. Having these securities issued by the MRFE would be an added benefit (particularly if the legislation makes the MRFE paper good collateral for the Fed discount window and TT&L accounts, which commercial banks establish for Treasury deposits.)

My friend for Treasury Secretary!!!

By Big Tent Democrat, speaking for me only

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    Maxine Waters ... (5.00 / 1) (#1)
    by Robot Porter on Wed Oct 08, 2008 at 07:23:26 AM EST
    on Tavis Smiley last night said this measure is already in the bailout.

    (There is one line in the bill that sort of allows for it, as I recall.  But it's not enough.)

    But will this be Obama's push back on the McCain plan?  It's already in the bill?

    There is no HOLC (5.00 / 4) (#2)
    by Big Tent Democrat on Wed Oct 08, 2008 at 07:24:57 AM EST
    in the bailout. Giving the Treasury Secretary discretion to act is NOT creating an agency whose mandate is to do it.

    Agreed ... (5.00 / 1) (#3)
    by Robot Porter on Wed Oct 08, 2008 at 07:26:02 AM EST
    just reporting what Waters said.

    I wonder if Maxine actually read the thing :) (5.00 / 2) (#53)
    by Militarytracy on Wed Oct 08, 2008 at 09:00:02 AM EST
    It's in the mail--er, bail -- Obama talkingpoint (none / 0) (#104)
    by jawbone on Wed Oct 08, 2008 at 12:13:11 PM EST
    which has made it into the MCM with the usual lightning speed with which MCMers accept their chosen candidate's spin.

    Even on WNYC this morning, the program host, Brian Lehrer, and the WNYC political reporter, both very politically astute, agreed it was "in the bail," aka Paulson Fix. Without, of course, knowing the details of the plan which McCain was to have been announcing very soon after the program aired. Could not wait to make the Obama talking point known. Hard Pundit Law.

    No mention of the HOLC/HOME plan offered several times now by the junior senator of their state. It is hard Pundit Law that when the MCM decides to ignore a politician, that person becomes invisible, unheard, and not to be talked about.

    Well, the McCain campaign gave credit to Hillary directly! Which made it into the NYTimes aritcle, bcz a pol still covered made the comment. Will she and her plan be mentioned now??? Developing....

    Too bad Obama couldn't have considered her plan--he sure glommed onto lots of other things she proposed and said. "I agree with Hillary" was an oft heard phrase from Obama in the Dem debates.

    My take? Implementing anything like HOLC will be right up there with UHC for an Obama administration.* He is by nature a very, very cautious politician, and I don't see him bucking the Villagers' dictate that the next prez must, MUST, be fiscally conservative.

    The Brokaw question about whether either would demand the Congress "fix" SocSec (which doesn't need fixing, Tom, Barry, John) and Medicare (which does, but I fear your fixes) was a shot across the bow of both candidates, but aimed more at the likely winner and current MCM choice. Obama will be held to a fiduciary responsibility that was never appplied to BushCo. But was applied to Clinton.

    It's the last best defense against Dems well, the Democratic wing of the Democratic Party) enacting progressive/liberal programs. It's part of the "create enough debt to drown the libs" strategy the Repubs seem to favor.

    *I will be ecstatic to be surpised and delighted to eat crow and find Obama does implement UHC and HOLC/HOME.


    Axelrod on NPR this morning (5.00 / 3) (#4)
    by Democratic Cat on Wed Oct 08, 2008 at 07:28:47 AM EST
    Said he didn't think Obama would be in favor of this. I don't understand why they weren't out in front on this issue and now that McCain has raised it, they seem determined to take an opposing view. Unless Axelrod was speaking out of turn.

    It will be stupid ... (5.00 / 4) (#5)
    by Robot Porter on Wed Oct 08, 2008 at 07:32:50 AM EST
    if they allow McCain to run to Obama's left on the mortgage crisis.

    Of course, McCain could change his position on this in a day, and we're back where we started.

    But I think Obama's failure to fully embrace a HOLC-like plan when it was first suggested says a lot about who he is.


    Axelrod sez (5.00 / 3) (#72)
    by Democratic Cat on Wed Oct 08, 2008 at 09:24:29 AM EST
    He notes the proposal is provided for in the bailout bill (which I think BTD has debunked), and then says: "I don't think at this juncture that is the, uh, that Obama would be all in on a strategy like that, but it is a tool that's available." Then goes on to talk about how fast moving the crisis is and "we'll have to see," I think meaning we'll have to see what Obama wants to do after elected. Well if it's so fast-moving, then why do we have to wait months to find out what Obama thinks? I'm sick of this mealy-mouth nonsense. Tell me what you think should be done, and let me base my vote on that. Sheesh, I hate these people.

    Yep. I watched the debate (5.00 / 2) (#103)
    by hairspray on Wed Oct 08, 2008 at 12:10:00 PM EST
    and only once did Obama mention that Bush had inherited a surplus. He did not slam home the great economy a Democratic president (even if he couldn't say the name Clinton) left for Bush to squander.  It is too bad that Obama also has CDS. Are we going to loose HOLC because of this kind of pettiness?

    Lambert says Obama didn't use the word Democrat (5.00 / 3) (#105)
    by jawbone on Wed Oct 08, 2008 at 12:16:19 PM EST
    or Democratic during the debate.

    Amazing, huh?

    He is The One, the only, the singular, and not of a mere political party. He only use the Democratic Party line to get elected. He is beyond the concept of parties. He will lead the enlightened, those who have seen the light.

    Which I have not seem.

    I will be happy to be proved wrong.


    Well (5.00 / 5) (#6)
    by Big Tent Democrat on Wed Oct 08, 2008 at 07:38:08 AM EST
    If I were McCain, I would hammer it then.

    BTW, McCain would have been smart to credit Hillary Clinton for the idea. Of course he did not. Foolish.


    Agree McCain was foolish not to (5.00 / 2) (#8)
    by Democratic Cat on Wed Oct 08, 2008 at 07:42:55 AM EST
    The NYTimes this morning gives her credit, so it might become part of the narrative despite McCain's foolishness.

    I'm glad to hear that (5.00 / 3) (#90)
    by AccidentalTourist on Wed Oct 08, 2008 at 09:50:37 AM EST
    I was saying in the debate thread that the media's short-term memory on this issue and who really originally proposed it - not McCain - is appallingly short. I don't understand why Obama didn't pick up on HOLC when Hillary began talking and writing about it to begin with.

    I want to see Obama support this idea. If it will pain him to credit Hillary, perhaps he can put his own spin on it somehow. But Dems need to reclaim it, rather than letting McCain "maverick" away with it.


    Get over it (5.00 / 3) (#96)
    by mmc9431 on Wed Oct 08, 2008 at 10:23:28 AM EST
    We have had 8 yrs of a president doing everything within his power to be the "anti-Clinton". (Pulling out of treaties, scrapping programs). I really hate to think that with an elected Democrat, we're still going to be dealing with this. If a program is good for the country I wouldn't care who proposed it. If it isn't, Obama needs to speak to why he feels it isn't good. And then offer his alternative. Things are moving way too fast for him to take a wait and see attitude.

    It's a very interesting play ... (5.00 / 1) (#13)
    by Robot Porter on Wed Oct 08, 2008 at 07:50:58 AM EST
    and might be quite effective if Obama continues to oppose it.

    He should credit Hillary.  And play it as a concrete example of his "maverickiness."


    Yep (none / 0) (#16)
    by Big Tent Democrat on Wed Oct 08, 2008 at 07:52:38 AM EST
    The one thing that still worries me the most. . . (5.00 / 9) (#14)
    by LarryInNYC on Wed Oct 08, 2008 at 07:51:12 AM EST
    about Obama is that he also doesn't seem to be able to reach out across the "aisle" to take Clinton's hand.  Not "also" -- McCain has been more gracious towards Clinton than Obama in the general election (not withstanding that coming from him it's all lies for crass political purposes).

    Assuming he does plan to get behind some kind of homeowner rescue plan, I'd really like to see Obama announce it at Clinton's side.

    His inability to show some gracious recognition of Clinton bugs me not only because I thought Clinton was a great candidate but also because it calls into question his desire to work with traditional Democratic constituencies if elected.  We know he'll work with Republicans and Conservatives -- but is he going to work with us?


    Yep (5.00 / 2) (#15)
    by Big Tent Democrat on Wed Oct 08, 2008 at 07:52:23 AM EST
    After trashing the Clintons in the primary, he (none / 0) (#92)
    by WillBFair on Wed Oct 08, 2008 at 09:59:55 AM EST
    would have a tough time ackowledging their contributions now. Just outlining those contributions would put him in office in a walk. We're talking about the most spectacular governing record of our time. And even the cow like public would be impressed by it.

    As a responsible home (oh alright, condo) owner .. (5.00 / 4) (#97)
    by FreakyBeaky on Wed Oct 08, 2008 at 10:28:13 AM EST
    ... I blame Easy Al Greenspan's easy money and the Wall Street-led wholesale collapse of underwriting standards, and all the fraud, corruption and stupidity that went with them, for the RE bubble/bust and current financial crisis much more than a few irresponsible borrowers.  

    Gotta blame the big fish.  There have always been irresponsible borrowers.  Generally, they do not cause entire markets to crash ...  


    Yeah, like all those po' folk got, like, organized (5.00 / 1) (#107)
    by jawbone on Wed Oct 08, 2008 at 12:49:20 PM EST
    and MADE the banks sell        dicey, unfair, unrealistic loans to them and then had the temerity to FORCE the Big Banker Boiz to buy those mortgages and, by sheer mind control, caused math geniuses to come up with slices, dices, purees, and other derivatives, tranches, financial instruments that even Paulson (while at Goldman-Sachs) and his Merry Banksters simply could not understand, and so they unwittingly sold across the globe to unwitting buyers who thought the ratings agencies' rating of AAA actually meant they were good investments!

    Day-ummmm, those po' folk sure are financial wizards. Too bad they didn't do it to benefit themselves, huh? Like, they were so generous to let all the millions in profit just go to the Big Banker Boiz!



    No it is not (none / 0) (#88)
    by Big Tent Democrat on Wed Oct 08, 2008 at 09:48:50 AM EST
    Peasae read the thread.

    Shall and may figure prominently in the discussion.


    WSJ blog, Deal Journal, says McCain's plan NOT in (none / 0) (#106)
    by jawbone on Wed Oct 08, 2008 at 12:26:52 PM EST
    the Paulson Fix Is In.

    Heidi Moore writes that several others have made proposals similar to McCain's, that McCain's is different, and, wow, better than the Paulson Fix. It's in the title--check it out. Good links.

    ...It actually is a plan that has been proposed before-and pitched again twice in the past week-by professors Glenn Hubbard and Chris Mayer of Columbia University and Marty Feldstein at Harvard University. It also resembles a plan proposed by Democratic Rep. Barney Frank of Massachusetts and Democratic Sen. Chris Dodd of Connecticut in March to auction off mortgages and allow them to be refinanced by the Federal Housing Administration. The Frank-Dodd legislation would have given the FHA $20 billion to buy and refinance as much as $300 billion of mortgages. It was supported by New York Sen. Hillary Clinton* during her guarantee primary campaign for the Democratic presidential nomination.

    Everyone who has proposed the mortgage plan supports it because they believe the $700 billion rescue passed by Congress last week won't go far enough to stem the financial crisis. Why is the mortgage plan necessary if we have a $700 billion bailout already in place? Deal Journal takes a look.

    What is the difference?: McCain's mortgage plan would have Treasury buy up $300 billion in actual mortgages. It differs from the Frank-Dodd plan by using Treasury as a direct financing source-a solution that is more plausible today because Treasury has already become a direct financing source for mortgage giants Fannie Mae and Freddie Mac, has loaned $85 billion to American International Group, and is providing a credit line to the Federal Deposit Insurance Corp.

    The $700 billion bailout, or troubled assets relief program, dubbed as TARP, would buy only the mortgage securities that are weighing down the banks, not mortgages themselves. The problem, as McCain proponents see it, is that this doesn't stem the tide of homeowners defaulting on their mortgages. When homeowners default, the value of the mortgage-backed securities keeps falling, which makes them riskier to the banks and even harder to sell. In essence, the McCain proponents believe in helping the problem at its source. The biggest problem with TARP, according to its opponents, is that the pricing of mortgage-backed securities is difficult when no one is buying and it is likely that Treasury may end up overpaying for worthless loans.(Emphasis mine, except for heading "What is the difference?")

    There's more on the deets at the link.

    *Unfortunately, the WSJ blog writer does not credit Hillary's more recent direct HOLC/HOME proposals. Hey, it's hard to do at the WSJ....


    Is this our first glimpse of Obama's (5.00 / 6) (#44)
    by Militarytracy on Wed Oct 08, 2008 at 08:45:25 AM EST
    New Deal dislike?

    In a word ... (5.00 / 5) (#45)
    by Robot Porter on Wed Oct 08, 2008 at 08:48:29 AM EST

    But I honestly hope I'm wrong.


    It's a notion that's ... (5.00 / 2) (#98)
    by sj on Wed Oct 08, 2008 at 10:44:07 AM EST
    ... more than a little to populist for Obama (as I read him).  I think he would be personally opposed to the idea.

    Not to mention that the initial push came from HRC.  He will not voluntarily do a single thing that enhances her visibility, creds, accomplishments, policies, etc.  He's put her to work on the campaign trail, and her reward for all that work is his august presence in the Oval Office.  That's enough reward, right?  

    In fairness, to her, the alternative is not an option.

    Clearly that's my opinion, but I don't believe for a second that Axelrod was speaking out of turn.


    Yes (5.00 / 1) (#116)
    by sallywally on Wed Oct 08, 2008 at 11:30:00 PM EST
    which makes me wonder what on earth he has in mind when he says help for the ... what is it ... homeowners? middle class? I can't remember his exact words, but it sounded like he wanted a program that would seriously help the folks who have lost the most, and it seems like it would almost have to be like HOLC.

    And yes, I agree that Obama apparently doesn't want to acknowledge or in any way support Hillary, even though she's working her behind off for him, or Bill, even though he's doing the same.

    Plus, Obama has Bill's economic team advising him while he doesn't acknowledge the significance and value of the Clinton presidency.

    I do support Obama strongly. But I think this CDS is a real smallness on his part that hurts more than helps the country.

    But of course, NO WAY. NO HOW. NO McCAIN/PALIN!!!


    Help for the middle (5.00 / 1) (#7)
    by Lahdee on Wed Oct 08, 2008 at 07:41:34 AM EST
    That seemed to be the cry last night, and what better way then with HOLC. John McCain not withstanding, it would seem more likely to pass in a veto proof Senate. That may not be the case, but I cannot imagine republicans approving such an effort. They'd probably denounce it as a huge government bailout designed to help "those people" who shouldn't have had mortgages in the first place.

    I am still very surprised (5.00 / 1) (#9)
    by lilburro on Wed Oct 08, 2008 at 07:45:01 AM EST
    that McCain started the debate with this proposal.  But the fact that it goes against his base and that Sarah Palin would probably call it "unpatriotic" suggests to me that coming from McCain, it isn't going to endanger Obama's political fortunes much at all.  A McCain HOLC just suggests the disarray of Republican ideology right now.  

    Efff who it helps politically (5.00 / 7) (#12)
    by Big Tent Democrat on Wed Oct 08, 2008 at 07:50:22 AM EST
    It really is what the country needs.

    Yep (none / 0) (#17)
    by lilburro on Wed Oct 08, 2008 at 07:53:08 AM EST
    but McCain implementing it is so NOT what is needed.

    McCain is toast (5.00 / 2) (#22)
    by Big Tent Democrat on Wed Oct 08, 2008 at 08:00:00 AM EST
    Now we have to make Obama do it.

    How? (5.00 / 5) (#67)
    by mmc9431 on Wed Oct 08, 2008 at 09:18:08 AM EST
    He seems to have a slight hearing problem!

    Maybe the suggestion needs to come from the fundamentalist's rather than the progressive's. He seems nore concerned with their opinion than ours. (snark)


    This issue ... (5.00 / 8) (#18)
    by Robot Porter on Wed Oct 08, 2008 at 07:54:04 AM EST
    if Obama opposes it will show the split between issue Dems and straight partisans.

    As much as I hate to say it, McCain has taken the right position.  And Obama has taken no position, which is the wrong position.

    I said on an earlier TL thread (5.00 / 5) (#24)
    by votermom on Wed Oct 08, 2008 at 08:08:40 AM EST
    that my vote will go to the candidate who gets behind Hillary's HOLC.
    Maybe McCain is reading TL and he'll be calling me shortly to collect my vote.
    What an upside down election this is.

    There you go ... (5.00 / 6) (#27)
    by Robot Porter on Wed Oct 08, 2008 at 08:15:34 AM EST
    a concrete example of why this could be a game-changing play for McCain.

    If Obama opposes this, I'll be fascinated to hear his reasoning.

    This won't shift my vote to McCain.  But I hope McCain argues for it hard. It's an important program.  A necessary program.  And needs to be talked about now.


    If profits from the sale of real estate (5.00 / 1) (#51)
    by ChiTownDenny on Wed Oct 08, 2008 at 08:55:42 AM EST
    by those who benefit from a HOLC program were returned to taxpayers, by the amount of such bailout, I could support a HOLC program.  Otherwise, not so much.

    This idea is also being rolled out (5.00 / 2) (#57)
    by Militarytracy on Wed Oct 08, 2008 at 09:07:41 AM EST
    by those who are seriously talking HOLC.  Doing it in that fashion also does not penalize people like me who didn't buy into this credit insanity and only purchased the home I was certain I could make payment on.  Many things are addressed doing it in this fashion.  Families facing foreclosure get to keep a roof over their heads, I continue to have incentive to pay my own mortgage.

    Here's what you do (5.00 / 4) (#64)
    by Steve M on Wed Oct 08, 2008 at 09:16:01 AM EST
    When HOLC gives someone a break on their mortgage, the government gets an equity interest in the home to compensate for the aid being offered.

    This way, the taxpayer gets to stay in their home, but if and when they do sell it, the government has a lien and will get repaid out of the proceeds of the sale.  So HOLC becomes a way to help people stay in their home, not a way to help people make a profit off their home.


    I thought of that last week (5.00 / 4) (#80)
    by Fabian on Wed Oct 08, 2008 at 09:34:30 AM EST
    but couldn't figure out a way to say "Hey, we'll knock your mortgage down so you can pay it but we're taking our cut when you sell it.".

    I like it.  I don't want another housing bubble to start just because people are trying to cash in on the house that Uncle Sam helped them to buy.


    from selling his home, why would he decide to take the risk of becoming an owner in the first place?

    I'm not sure I follow you (5.00 / 1) (#112)
    by Steve M on Wed Oct 08, 2008 at 01:39:24 PM EST
    All I'm saying is that our goal should be to keep a roof over people's heads, not to provide them with a taxpayer-sponsored profit that the market wouldn't otherwise deliver.

    In the mildest form, let's say I provide you with $50k of mortgage assistance, and in exchange I take a $50k lien on your property.  In effect, what I've done is given you a $50k interest-free loan that you don't have to repay until you sell your home.  That's a great deal for you as a homeowner, right?  But from the government's perspective, it's a lot better for the bottom line than simply giving you $50k as a gift.


    not a way to help people make a profit off their home.
    Making a "profit" off your home is one of the major reasons people buy homes. They often use that "profit" to retire on, for example.

    As far as the rest, sign me up! If the gvt would pay off my mortgage for me today I'd happily give that money back whenever I sell.


    Uh, to live in?? Still get tax deduction. (none / 0) (#108)
    by jawbone on Wed Oct 08, 2008 at 01:09:10 PM EST
    Altho' there are economists who say owning is the way to go for most people.

    Right, because if you don't own a home (none / 0) (#109)
    by sarcastic unnamed one on Wed Oct 08, 2008 at 01:19:46 PM EST
    you don't have anywhere to live.

    I didn't buy my house as an investment (and if I (5.00 / 1) (#114)
    by jawbone on Wed Oct 08, 2008 at 02:44:08 PM EST
    had, it was not a great one)--I bought it for proximity to NYC and to work, layout, size of yard and garden, location which could pull in my favorite public radio stations. For lots of reasons. Wall space for my art collection (so small time and, yes, some posters--but I really wanted room to display the things I love to look at).

    Also, in my area of NJ rents were completely outrageous at the time. I was in sticker shock from so many higher priced things, including housing, but, actually, buying was less expensive than renting at the time, especially since haveing the pets limited my rental options.

    Over time, my house payment is far lower than rent; however, the property taxes are increasing rapidly and starting to make that ration much different from when I purchased.

    So, there are lots of reasons to buy instead of rent--not all of which are a belief that a house means future riches.

    Lots of factors lead to buying being better for those with animals, children, desire for privacy, growing food, etc.

    There's nothing wrong with renting and is the best way to go for some.


    No offense, but that's what everyone says, now, who isn't in the black on their home.

    I heard the same thing a lot in the early 90's. Not so much from about 2000-2007ish. And before that from about the end of WWII through the late 80's.

    Real estate, including owning your own home, has generally been characterised as an investment ever since property ownership was invented, which was probably some time back around when money was invented.

    Anyway, it is a significant factor in many/most people's home-buying decision making processes, but not, as you point out, the only factor.

    All this may be irrelevant, however, if Steve M's concept is to be taken seriously.

    If the home appreciates, there will be "profit" after you sell and pay the gvt back the money they loaned at zero interest you all those years before.

    As I said, sign me up for that program! If when I'm 90 y/o and sell my home and it didn't appreciate and I can't pay the gvt back, what are they gonna do?


    Genuine good economic news today. (5.00 / 2) (#66)
    by tigercourse on Wed Oct 08, 2008 at 09:17:56 AM EST
    Pending homesales rose 7% in August, which frankly shocks me.

    Um (none / 0) (#70)
    by Big Tent Democrat on Wed Oct 08, 2008 at 09:22:11 AM EST
    It's October. Not sure how good news from august helps us now.

    Well, as you've pointed out, a dead (5.00 / 1) (#76)
    by tigercourse on Wed Oct 08, 2008 at 09:26:52 AM EST
    housing market is at the center of our economic problems. These August figures (which were expected to be a 2% drop) represent a degree of life within the patient.

    I'm disapointed Obama (5.00 / 2) (#79)
    by Faust on Wed Oct 08, 2008 at 09:32:57 AM EST
    is not pushing HOLC, I said it before and I'll say it again, either he is opposed to this idea or they have polling that indicates it will not be popular. Or at least that it won't appeal enough to independants.

    I did watch the dials when McCain suggested it and the dials went down. they were still slightly positive, but they were just above the midline. So apparently people do not understand that HOLC is where we need to go, at least not in a big way.

    In any case if Obama really does not get that this is the way to go we are going to have to work through our representatives to shove this in his face and get him to accept it.

    Or it just shows ... (5.00 / 3) (#85)
    by Robot Porter on Wed Oct 08, 2008 at 09:45:32 AM EST
    who's pulling his strings.

    Sure (5.00 / 2) (#94)
    by Faust on Wed Oct 08, 2008 at 10:09:13 AM EST
    I'll buy that.

    Part of the problem with Pols in an election environment is that it is really hard to believe anything they say. Or know exactly where their motivations Does McCain believe what he says? Does Obama? Who the frak knows at this point. They both want to be elected so they can do whatever it is they think they want to do. If they even know.

    $hit remember when GWB said he wasn't interested in nation building in the debates with Gore. That he wasn't an interventionist? LOL yeah that worked out great.

    This is part of what people hate about politics, there are so few pols that say what they mean. That's why the stright talk express line used to work so well, before it became clear it was just another bull$it express.


    The Details of McCain's ... (5.00 / 1) (#81)
    by Robot Porter on Wed Oct 08, 2008 at 09:40:27 AM EST
    plan are here.

    I found this part intriguing:

    Funds provided by Congress in recent financial market stabilization bill can be used for this purpose; indeed, by stabilizing mortgages, it will likely be possible to avoid some purposes previously assumed needed in that bill.

    He's right (none / 0) (#86)
    by Big Tent Democrat on Wed Oct 08, 2008 at 09:47:00 AM EST
    And what's Obama's ... (5.00 / 1) (#89)
    by Robot Porter on Wed Oct 08, 2008 at 09:50:24 AM EST
    counter argument?

    More of the bailout money should got to banks and Wall Street?


    You tell me (5.00 / 1) (#91)
    by Big Tent Democrat on Wed Oct 08, 2008 at 09:54:08 AM EST
    I am pressing in my small way.

    Framing (5.00 / 3) (#82)
    by mmc9431 on Wed Oct 08, 2008 at 09:41:39 AM EST
    Democrat's are pathetic at framing an issue. Whether it's Iraq, FISA, UHC or now HOLC. Hilary is one of the few that has taken the time and effort to explain the need and benefit of the program.

    What's in Obama's (5.00 / 1) (#87)
    by WS on Wed Oct 08, 2008 at 09:47:37 AM EST
    middle class rescue package?  Has he stated what's in it?

    More important,, what's in it for Obama? I think (5.00 / 1) (#110)
    by jawbone on Wed Oct 08, 2008 at 01:21:20 PM EST
    that's what would help us to judge what an Obama presidency will be like, what his real objectives are, what he will try to do, what he will fight for. What is he offering and what does he hope to achieve with the mere offer?

    His seed money came from, in large part, the Big Banker Boiz. Does he owe them? Is he influenced by them? Is his support of the Paulson Fix Is In, with his daily negotiating with Paulson and the Congressional leaders influenced by the Big Banker Boiz? Did he throw mortgage assistance under the bus bcz of that early assistance? We'll look at it tomorrow, tomorrow....

    I will be delighted to find a progressive, liberal Obama, nonmilitaristic to boot.

    We may never know what he thinks--but we will know, when it's after the fact, what he does.

    I have never not felt fervent support for the Dem nominee, but this is that year.

    As Bernhard said at Moon of AL, there are simply too few data points to know what Obama will do, be like,  or just is thinking.

    ... By now, I believe, the elite that gives guidance to the media has decided on the winner. Obama will be the next prez of the U.S. people.

    His published programs and personal background give too few data points to estimate how he will really act in that capacity. That's frightening, but it will spare us the nightmare of a Palin regency and may balance the Supreme Court.

    Good idea? (2.00 / 0) (#23)
    by Abdul Abulbul Amir on Wed Oct 08, 2008 at 08:08:33 AM EST

    So why is it a good idea to have the tax payer pick up the tab so someone making $20,000 can stay in the house purchased just last year for $360,000 on a no money down mortgage?

    I'll take the bait. . . (5.00 / 8) (#26)
    by LarryInNYC on Wed Oct 08, 2008 at 08:14:25 AM EST
    even though this is borderline trolling.

    Two answers to your question.

    First off, a properly structured HOLC would not keep a 20k worker in a 360k house.  It would offer existing homeowners a good-value fixed rate  mortgage at the current fair market value of their home.  If such a mortgage would allow them to make payments on their salary then they would be able to keep the home.  If not, not.

    Secondly, during the current fiscal emergency, it actually would be advantageous to keep people in homes they can't afford.  The alternative is having huge, blighted neighborhoods of empty houses and apartments, leading to further loses of  small retail and service business, more lost jobs, and a downward spiraling local economy.  While it may offend your Republican sense of "fairness" to keep those people in their houses, at least temporarily, there are a lot of people in the surrounding community who did things "right" who would be hurt if the community were to collapse.


    for the sake of discussion (none / 0) (#36)
    by Abdul Abulbul Amir on Wed Oct 08, 2008 at 08:27:31 AM EST

    So as I understand it the taxpayer will pay off the existing mortgage, and issue a new one for the estimated current market value and at an interest rate low enough that it is affordable for the current owner no matter how little the income of that owner.

    Is that understanding correct?

    As to your second point.  There does not appear to be any evidence that "huge, blighted neighborhoods of empty houses and apartments" are in the offing.  Do you really content that there are huge neighborhoods where most or all people took out mortgages they had no realistic prospect of repaying?


    whoa (5.00 / 4) (#38)
    by Big Tent Democrat on Wed Oct 08, 2008 at 08:29:11 AM EST
    "There does not appear to be any evidence that "huge, blighted neighborhoods of empty houses and apartments" are in the offing."

    Herbert Hoover incarnate.


    Note, too, the assumption (5.00 / 5) (#40)
    by Steve M on Wed Oct 08, 2008 at 08:34:39 AM EST
    that the ONLY way anyone could be in danger of losing their home is if they "took out mortgages they had no realistic prospect of repaying."

    This is how Republican thinking has worked since at least the days of Reagan's "welfare queen."  Somehow, the notion that there are a few people cheating the system gets transmogrified into the notion that everyone is cheating the system.


    Not at all (none / 0) (#56)
    by Abdul Abulbul Amir on Wed Oct 08, 2008 at 09:06:48 AM EST

    It seems that the proposed solution is going include those who took out mortgages they had no realistic prospect of repaying.  

    There is no evidence that that number is large.  Therefore, there reason for taxpayers to make good on their bad choices.


    Given that our economy, indeed many (5.00 / 2) (#61)
    by tigercourse on Wed Oct 08, 2008 at 09:12:23 AM EST
    economies across the world, are on the brink of an abyss, I think it's pretty evident that no matter the SIZE of the number of homes in foreclosure, the number is SIGNIFICANT.

    And if taxpayers are going to make good on Wall Street's bad choices, I think we can do something for main streets bad choices.


    Oh (none / 0) (#62)
    by Steve M on Wed Oct 08, 2008 at 09:12:52 AM EST
    Well if there is no reason to believe that number is large, there's no reason to worry about it.

    The reason (none / 0) (#117)
    by Abdul Abulbul Amir on Thu Oct 09, 2008 at 08:47:55 AM EST

    The reason is that there will be more the next time.  If you provide rewards for speculators that get in over their heads it is an invitation to more of the same.

    I think he hasn't been to ... (none / 0) (#95)
    by sj on Wed Oct 08, 2008 at 10:19:50 AM EST
    ... Baltimore city.  It was on the brink of recovery when the housing bubble burst.  And it's really struggling again.  

    It makes me feel sad to see so very many empty, boarded up homes.  And they can be dropped smack dab in to any neighborhood, from chi-chi to middle class, to working class to the poorer areas.  

    Nearly every block has at least one for-sale sign and/or an empty building.   And since most of the homes in the city are adjacent (not free standing), there is a huge impact to the surrounding homes.  It's a harbor town, you see.  Ships often leave their rats behind.  Kind of a metaphor, I think...


    No. (5.00 / 3) (#39)
    by LarryInNYC on Wed Oct 08, 2008 at 08:34:05 AM EST
    Is that understanding correct?

    Come back when you can do me the courtesy of actually reading up on what you're talking about.


    In Florida (5.00 / 2) (#84)
    by Coral on Wed Oct 08, 2008 at 09:44:38 AM EST
    There are blighted areas of foreclosed homes. City and town governments are maintaining the properties, by cutting lawns, etc. and attempting to keep looters from going in to tear out copper and other scrap materials.

    The same thing is happening in CA and OH. In some cases they are painting brown lawns green.


    Oh I don't know. (5.00 / 4) (#28)
    by rooge04 on Wed Oct 08, 2008 at 08:16:10 AM EST
    Because lenders lied to them and told them their houses were guaranteed to appreciate? Or they didn't explain the terms to them properly? Or they were generally predatory in every way?? Yeah. Terrible idea. It's not a Democratic value or anything to help out your fellow Americans. Let them eat cake, right?

    Also, homeowners were ... (5.00 / 7) (#31)
    by Robot Porter on Wed Oct 08, 2008 at 08:17:56 AM EST
    only making the same bet that the "geniuses" in the financial sector made.

    Exactly. (5.00 / 6) (#32)
    by rooge04 on Wed Oct 08, 2008 at 08:19:52 AM EST
    And punishing those people is really what we should do. Not that it wouldn't create huge swaths of empty homes and the economy to collapse further or anything. I don't understand how anyone purporting to be a Democrat would ever not see the good in HOLC...both for individuals and for the economy and the country as a whole.

    Well (5.00 / 1) (#34)
    by Steve M on Wed Oct 08, 2008 at 08:27:22 AM EST
    Not everyone is a Democrat, or purports to be one, you know.

    But (5.00 / 3) (#74)
    by mmc9431 on Wed Oct 08, 2008 at 09:25:57 AM EST
    Obama is supposed to be a Democrat.

    And some now are nnot even Republican (none / 0) (#37)
    by Big Tent Democrat on Wed Oct 08, 2008 at 08:28:21 AM EST
    They are GOP (See Dino Rossi in Washington State.P

    My assumption (none / 0) (#42)
    by rooge04 on Wed Oct 08, 2008 at 08:35:50 AM EST
    would be that someone posting on TalkLeft would be interested in Democratic policies, don't you?

    No (none / 0) (#63)
    by Steve M on Wed Oct 08, 2008 at 09:13:15 AM EST
    We have several Republicans who post here regularly.

    Socialized homeowning. . . (none / 0) (#10)
    by LarryInNYC on Wed Oct 08, 2008 at 07:46:08 AM EST
    according to the various quotes I've read from the right-o-sphere on the left-o-sphere this morning the mortgage plan seems to be the biggest hit the righties have against McCain.

    That has nothing in particular to do with whether it's a good idea or whether Obama should get behind it.  But hopefully it will be good for a one or two point drop in base support for McCain.

    It's an imperative (5.00 / 5) (#11)
    by Big Tent Democrat on Wed Oct 08, 2008 at 07:49:53 AM EST
    And good for McCain for forwarding it.

    Do you think. . . (none / 0) (#20)
    by LarryInNYC on Wed Oct 08, 2008 at 07:55:01 AM EST
    McCain really intends to implement such a thing?  Or is it pure political posturing?  Honest question, want to know your opinion.

    I would be willing to bet that if McCain loses and homeowner relief is voted on in the Senate while he's still there (in a clean bill, so there's no confusion about what's being voted on) that he votes against his own proposal.


    Well (5.00 / 9) (#21)
    by Big Tent Democrat on Wed Oct 08, 2008 at 07:59:30 AM EST
    Here's how I see it, someone who wants it to happen will use McCain's statement, claim there is now a bipartisan consensus on the issue and push it through.

    McCain's motives are not my concern. Forwarding the issue is.


    The primaries are over though (5.00 / 1) (#48)
    by Militarytracy on Wed Oct 08, 2008 at 08:54:28 AM EST
    This is the general election with indy voters :)  I guess if Red State gets super steamed they can just vote for Obama.....Muwahahahahaha.

    You are comfotably forgetting (none / 0) (#19)
    by koshembos on Wed Oct 08, 2008 at 07:54:57 AM EST
    That even the Democrats votes for the second huge tax cut for the rich, sometime called bail out.

    If it's in the bill... (none / 0) (#25)
    by wasabi on Wed Oct 08, 2008 at 08:14:18 AM EST
    it's in the bill.  The Repubs already signed off on it.  Obama can direct his new Secretary of the Treasury to implemnt HOLC come January.  We win.

    It's not in the bill (5.00 / 4) (#29)
    by Big Tent Democrat on Wed Oct 08, 2008 at 08:16:38 AM EST
    HOLC I mean.

    So? (5.00 / 5) (#30)
    by LarryInNYC on Wed Oct 08, 2008 at 08:17:26 AM EST
    Yes, but Obama could also direct his SoT to not implement it.  And since a) he himself hasn't mentioned support for any such plan and b) his spokesman said he believes Obama would oppose the plan described by McCain, there's no reason whatsoever (except projection of one's own opinions) to believe that Obama is likely to order any such plan.

    Furthermore, any such plan should originate in specific, controlling legislation, otherwise we're leaving too much up to whim of the executive.


    Yeah, but McCain couldn't deliver (none / 0) (#33)
    by scribe on Wed Oct 08, 2008 at 08:23:21 AM EST
    his own Rethugs to the bailout he suspended his campaign to push through, so why should anyone think he'll be able to deliver them for anything else, now.

    NOw he is on board (5.00 / 5) (#35)
    by Big Tent Democrat on Wed Oct 08, 2008 at 08:27:31 AM EST
    Bipartisan consensus.

    Now where's Obama on this?


    That just means he is one voice - (none / 0) (#49)
    by scribe on Wed Oct 08, 2008 at 08:54:42 AM EST
    his own party doesn't listen to him.

    And all this "bipartisan consensus" stuff is, in McCain-speak, spelled "tug your forelock, bow to your Republican betters and do what you are told, Democrat."


    You try it your way (5.00 / 1) (#50)
    by Big Tent Democrat on Wed Oct 08, 2008 at 08:55:26 AM EST
    I'll try it my way.

    Many Republican reps at first refused to (5.00 / 3) (#52)
    by Militarytracy on Wed Oct 08, 2008 at 08:57:10 AM EST
    believe how bad this crisis was going to be.  Every day is a new come to Jesus moment.  This crisis is blowing up the Republican party.......who will survive?  He/She who evolves is who will survive.

    Well (none / 0) (#41)
    by chrisvee on Wed Oct 08, 2008 at 08:35:18 AM EST
    we're in full financial meltdown today so it's going to be time for someone to articulate the post-bailout plan (as the original plan already seems to be DOA). I;ve been behind HOLC since Hillary first mentioned it but I think there are also things that need to be done for non-homeowners, too.

    Up until now, Obama has gained all of the political benefit from the financial crisis since he's the non-incumbent party option. But now the really bad stuff is about to go down so McCain gets a last chance. If he goes maverick on his party, he could do it but frankly, I doubt he can pull it off.

    Dubya is grasping and clutching at any ole (none / 0) (#43)
    by Militarytracy on Wed Oct 08, 2008 at 08:43:17 AM EST
    thing that could contain some redemption.  I can see where he is primed to begin to want this to happen during his watch.  I hope so because it can't happen too soon.

    The recently passed bill does not specifically (none / 0) (#46)
    by Elporton on Wed Oct 08, 2008 at 08:49:08 AM EST
    provide for the formation of the HOLC, but section 110 of the bill makes it clear that the Federal Housing Finance Agency "shall implement a plan that seeks to maximize assistance for homeowners" and provide "in the case of a residential mortgage loan, modifications made under paragraph may include (A)reduction in interest rates;(B) reduction of loan principal; and(C) other similar modifications."

    Seems to me that describes the HOLC only by another name.

    MAY (5.00 / 5) (#47)
    by Big Tent Democrat on Wed Oct 08, 2008 at 08:52:07 AM EST
    and "shall implement a plan" is just plain nothing.

    This is weak nothing.


    Perhaps you might believe otherwise but (none / 0) (#54)
    by Elporton on Wed Oct 08, 2008 at 09:06:29 AM EST
    I never viewed something that "shall be done" as optional.

    Notice that only ... (5.00 / 1) (#59)
    by Robot Porter on Wed Oct 08, 2008 at 09:09:13 AM EST
    the first part is "shall" the rest is "may."

    The rest? It's only one. (none / 0) (#68)
    by Elporton on Wed Oct 08, 2008 at 09:20:45 AM EST
    And I presume "may" is used there in order to provide for other options not specifically mentioned, such as an extension of a loan's amortization.

    All the shall provides for ... (5.00 / 3) (#75)
    by Robot Porter on Wed Oct 08, 2008 at 09:26:37 AM EST
    "implement a plan that seeks to maximize assistance for homeowners."

    That could mean almost anything.

    "shall implement ... that seeks"

    Maybe they'll make a movie.  Or write a pamphlet.


    Oy (5.00 / 3) (#78)
    by Big Tent Democrat on Wed Oct 08, 2008 at 09:30:54 AM EST


    1 a archaic: have the ability to b: have permission to (you may go now) : be free to (a rug on which children may sprawl -- C. E. Silberman) --used nearly interchangeably with can c--used to indicate possibility or probability (you may be right)(things you may need) ; sometimes used interchangeably with can<one of those slipups that may happen from time to time -- Jessica Mitford) ; sometimes used where might would be expected <you may think from a little distance that the country was solid woods -- Robert Frost)2--used in auxiliary function to express a wish or desire especially in prayer, imprecation, or benediction (long may he reign)(may the best man win) 3--used in auxiliary function expressing purpose or expectation (I laugh that I may not weep) or contingency (she'll do her duty come what may) or concession (he may be slow but he is thorough) or choice (the angler may catch them with a dip net, or he may cast a large, bare treble hook -- Nelson Bryant) 4: shall, must --used in law where the sense, purpose, or policy requires this interpretation</p>

    Here's a question for you - is Paulson REQUIRED to do a HOLC? Does the law in question "require this interpretation?"


    you need to learn to read legislation (none / 0) (#65)
    by Big Tent Democrat on Wed Oct 08, 2008 at 09:17:05 AM EST
    Thanks for your opinion. (none / 0) (#69)
    by Elporton on Wed Oct 08, 2008 at 09:21:50 AM EST
    I feel the same about you.

    We understand each other then (5.00 / 1) (#71)
    by Big Tent Democrat on Wed Oct 08, 2008 at 09:23:21 AM EST
    You MAY proceed at your leisure.

    You SHALL refrain from attacking me or you SHALL be banned from my threads.


    Could an HOLC/RTC plan (none / 0) (#58)
    by WS on Wed Oct 08, 2008 at 09:08:46 AM EST
    be created with new legislation using the bailout bill money already appropriated?

    I know $250 billion was to be given immediately to buy bad assets and $100 billion at the request of the President.  There's still the $350 billion that the Congress can refuse if a plan is put forward.  That money can be redirected and we won't have to go through the $300 extra billion "bailout" that the Republicans will call this plan?


    FWIW (none / 0) (#55)
    by NJDem on Wed Oct 08, 2008 at 09:06:39 AM EST
    Mark Halperin/The Page is saying that there is going to be a conference call with the JMc camp discussing the 'HOLC' plan this morning.  

    And that Biden was on all the morning shows and wouldn't say he supported it.  

    Also, I caught McCaskill on Fox last night (yes, I know...) and in her infinite wisdom she completely mocked the proposal.  

    Talk about topsy-turvy...

    What was Biden's argument ... (5.00 / 1) (#60)
    by Robot Porter on Wed Oct 08, 2008 at 09:10:47 AM EST
    against it?

    I'm genuinely curious.

    And, I agree, we're through the looking glass here.


    Not exactly sure, b/c I didn't see it myself (5.00 / 1) (#73)
    by NJDem on Wed Oct 08, 2008 at 09:25:33 AM EST
    but according to Halperin:

    Sen. Biden hit all three network morning shows.

    On NBC's "Today": Downplayed McCain's $300 billion mortgage proposal, saying the Treasury Secretary already has that power under the rescue package."

    On ABC's "Good Morning America": Biden repeated that Sec. Paulson already has the power to buy up mortgages, but sidestepped question on whether he should do so, saying it's "a judgment he's going to have to make."

    --OK, Obama/Biden, time to make that judgment!


    Beyond weird ... (5.00 / 3) (#77)
    by Robot Porter on Wed Oct 08, 2008 at 09:28:42 AM EST
    that's a judgment Paulson has to make?

    Really ... really?

    What about Sen. Barack "Judgment" Obama?


    Some Form of HOLC Makes Sense... (none / 0) (#99)
    by santarita on Wed Oct 08, 2008 at 10:46:47 AM EST
    as a way to keep homeowners in their houses and to recapitalize troubled financial institutions.  HOLC should have a 5 or 7 year sunset provision.    The system has to prevent gaming (e.g. if the government guaranties the renegotiated balance the lender has an incentive to reduce principal by a very minimal amount).  I also think the idea of having the government share in price appreciation is not so good unless there is a time limit.  After all a homeowner needs to maintain the home and perhaps improve it.  So the homeowner should get sweat equity.  I'd put some time limit on the equity appreciation sharing - this would eliminate the flippers.  

    Time limit sounds good. (none / 0) (#100)
    by Fabian on Wed Oct 08, 2008 at 10:53:44 AM EST
    10 or 15 years should be good.  Definitely no less.  If you want to cash in, then you need to make a commitment.  

    Proposed, interestingly, . . . (none / 0) (#101)
    by Doc Rock on Wed Oct 08, 2008 at 11:38:32 AM EST
    . . . when Congress is out for the 'duration'.

    They "came back" for the Terri Shiavo (none / 0) (#111)
    by jawbone on Wed Oct 08, 2008 at 01:25:39 PM EST
    special "session" and legislation.