The Government Needs to Start Buying Mortgages
Economists Joseph Stiglitz and Mark Zandi have a plan to fix the housing market
By Kevin Spak, Newser User
Posted Aug 13, 2012 1:59 PM CDT
In this file photo taken July 21, 2010, a "bank owned" sign is seen on a home that is listed as a foreclosure on a HUD website, in Hawthorne, Calif.   (AP Photo/Reed Saxon, file)

(Newser) – Five years after the mortgage crisis began, housing is still one of the biggest factors dragging the economy down. There's just one option left, economists Joseph Stiglitz and Mark Zandi write in the New York Times: Mass refinancing. "Well over half of all American homeowners with mortgages are paying rates that would appear to make them excellent candidates to refinance," they observe. But they can't because the collapse "has wiped out their home equity."

So they're supporting a plan, which has been introduced by Sen. Jeff Merkley, to help underwater homeowners refinance, setting up a government-backed trust to buy their mortgages while they build up equity. They'll have three years to refinance, during which time they'll pay a modest interest rate. The program will thus cost taxpayers nothing, while working "like a potent tax cut," all while freeing up lenders to seek new loans. Without government help, expect "significant pain and a long wait" for relief. Click for Stiglitz and Zandi's full column.

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Showing 3 of 16 comments
$28919642
Aug 14, 2012 7:28 AM CDT
Might even prove a long-term moneymaker for the Government. Good plan, workable.
MSCOTTASHLEY
Aug 13, 2012 8:53 PM CDT
Whoa Dudes, The USA already paid for those mortgage losses. This is another con by the capitalist to rip off the gov. And who do the authors of this idea work for? I have my own plan, write me a new mortgage at current market value and I'll sign it. Otherwise Corporate America Fuck You!
Comp_User
Aug 13, 2012 8:17 PM CDT
If you penalized all the banks the profits they made from selling bad mortgages and bundling the paper into securities and then shorting them you would have more than enough money to pay off all the mortgages that are under water. But if you did that who would be paying off the politicians to look the other way?