As Value Slides, More Homeowners Walk

Link here. (update - read my comment on this post for clarification for many may not quite understand my remarks in this post.)

The government could easily deal with the housing issue. Or at least keep people in their homes. When this crisis first broke we wrote that the government should have instituted the HOLC program from the Great Depression in lieu of the banking mobster racket we see now. One that has modified but a handful of mortgages while countless of Americans lose their home. In fact, there are many ways to deal with this but our government has literally done almost nothing to help homeowners. This after they were preyed upon by corrupt financial institutions. Securitization, a Wall Street scheme taken from the financial bubble that led to the Great Depression, played a major role. All so Wall Street could monetize and trade these assets. Proprietary trading did nothing to contribute to this crisis? Proprietary trading was at the heart of this crisis even though the lying lobbyists, Wall Streeters and their bankrolled politicians make a mockery of our democracy by arguing to the contrary. This is simply the tip of Wall Street's fraudulent iceberg.

I was talking to a friend about this the other day. The HOLC program would have kept a substantial number of people in their house as the government balance sheet could be expanded to any level to support these troubled mortgages as it was eighty years ago rather than foreclose as our private banking system is doing. At some point the government is going to have to step up and deal with this mess rather than just offering tax credits to new home buyers. New home buyers who will eventually become new foreclosures because the root cause of this crisis has not been addressed.

An easy solution to help ameliorate the housing mess (not solve it) is some variation of what I wrote on here some time ago. That is, the government eats the losses. ie, Rework every mortgage under water and the government absorb the delta of property value to mortgage and simply wipe the loss away then restructure the remaining mortgage. The HOLC program could have accomplished this quite easily. But instead our government would rather do what benefits the banking mobsters. Even as these same mobsters default on their own real estate holdings.