Brian Montgomery wrote an interesting post today on
Here’s a quick excerpt
In Saturday’s New York Times, Martin S. Feldstein, in an Op Ed entitled “How to Stop the Drop in Home Values”, argues that continuing declines in home prices are at the heart of America’s housing crisis and can only be stopped through a government plan that reduces borrowers’ mortgage principal … “when it exceeds 110 percent of the home(s) value.”
Mr. Feldstein’s plan of government sanctioned loan forgiveness would neither stem declines in home values nor contribute in any meaningful way to solving the current housing crisis. Quite the contrary, such a plan would ensure the permanent demise of the American housing industry and threaten all consumer lending. Never again could lenders make mortgage loans to homeowners with the assurance that they would be repaid. No – if we adopted Mr. Feldstein’s plan – lenders would be forever at risk that the commercial contracts freely entered into between themselves and homeowners [...]
Read the rest of this great post here
