Wednesday, October 13, 2010
There is an idea that is currently being bandied about that I believe deserves some serious consideration. Given the current state of the economy, even radical ideas should be considered. As many are all too aware, one of the root causes of the GREAT RECESSION has been the collapse of the real estate market in this country. The troubles and abuses in this sector have been well documented. Now the headlines reveal that many of the largest banks and mortgage service providers have exacerbated the problem by blindly approving foreclosures without even a cursory review of the underlining documentation ! This does not portend well for a resolution of the crisis. The idea that is gaining some traction, is calling for zero interest mortgages! Proponents make a compelling argument. Instead of the Federal Government continuing with its policies of funding bailouts for large banks ( allowing them to sit with the bailout cash rather than investing or loaning the money to improve the competitiveness of small business ), or purchasing toxic assets from the banks to improve their balance sheets,( which in many cases only passes the risk of defaults to the taxpayers ) why not consider having the Feds actually purchase the real estate itself, refurbish the properties through public work programs, and position those properties for sale to the public with an interest free mortgage. the mortgage would not have to be lengthy, say no more than ten years, allowing for the taxpayers to recover their investment in a timely manner, neighborhoods to be revitalized and putting people back to work. The banks are happy, the taxpayers are happy, home buyers are happy. Sounds to me like an idea whose time has come.