Jack M. Guttentag The Mortgage Professor

Rob - Thursday, January 29, 2009, 1:07PM ET  Report Abuse

• Overall: 2/5

When banks wrote the exsisting mortgage, they also took a risk. Why should the banks receive a bailout for their poor investments? Everyone took risks in this financial market. If we truly want to turn around this economy then the help should go to correct the problem. The problem is the high rate of failures in the home mortgage field. This has caused a trickle down effect. People can't pay their mortgages or their finances are so poor that there isn't available cash for purchasing or travel. Thus this is leading to the failures at companies that aren't tied to the home mortgage market. The problem with the writer's plan is that the people which receive the help cannot resell their homes later. The second lien will prevent the resale. This will prevent people from buying up in the market. This will hold back the recovery of the home mortgage system. Some will think this is unfair but the housing market is based on this type of resale. Is there a better solution? Do people realize how much $700 billion is? There is enough money to loan every home owner $500,000 to be used to buyout/buydown their home mortgage with plenty to be left over for those who wish to buy a house. The money could be repaid at zero percent interest. (This is what businesses are getting.)

Yahoo! Finance User - Monday, January 26, 2009, 9:47PM ET  Report Abuse

• Overall: 1/5

It is insane to ever think of re-writing the mortgage and reduce the payments for the borrowers. Borrowers should be made to pay their obligations irrespective of the asset value, because most overextended borrowers bought homes as investments. If the balance can be knocked off for those over-extended, then why can't the same incentive be given to those who saved in 401k. 401k holdings have gone down in value just like home values and it is also affecting the economy. Why homes are considered as assets and why not the 401k holdings? If the irresponsible dumbs are bailed out with tax-payer dollars, then the capitalism is dead.

Scott A H - Monday, January 26, 2009, 6:01PM ET  Report Abuse

• Overall: 1/5

This is a hard problem. Banks were encouraged to loosen standards in 1998 under President Clinton, the house of cards built up under President Bush, and now President Obama inherited a mess (he wasn't even a senator for most of ramp up). While a lot of the focus has been on preventing foreclosures, and there is a large outcry against bailing out those that played it fast and loose by those who were prudent with their home purchases, perhaps there is another way to look at it. People are walking away from homes because they can't sell and need to relocate, can't afford the payments due to a job change, or because they somehow feel its ok to walk away from the obligations they made due to the decline in home values. Maybe there is a way to help the first two situations, I have little sympathy for the 3rd. The solution may lie in a program that focuses on getting the person in the right house - either location or pricewise. A government program to mandate and facilitate swapping of mortgages/home would help the first case, i.e. someone can give up the keys to a house in one city and pick up the obligations on a house in their new city (negative equity and all). No stigma of foreclosure or damage to credit rating due to the transaction are a couple of key points. If a person overbought, let's help them downsize to a house within their means. Again, no stigma attached and they still take on some negative equity. For the prudent buyer that could now move up to a more expensive house, the program could encompass that situation as well, to help get the higher end houses off the market. For those that just want to run away from their obligations, foreclosure should be allowed to take its course. This certainly isn't a detailed program, but it is an approach to help honest people in need without bailing out the slackers. I am one of those prudent homebuyers that bought in 2005, I could get behind a program like that.

Yahoo! Finance User - Monday, January 26, 2009, 5:24PM ET  Report Abuse

• Overall: 1/5

the third phase won't work because it does not give the borrower any incentive to refinance the home at the 90% of the reduced appraisal price. The govt would take a 2nd mtge on the home for the difference it pays to the lender to reduce to 1st mtge. Therefore the borrower ends up with the same gross debt (the total of the 2 mtges,) on a property that is not worth that total. The borrower doesnt want to pay more than the appraised value of the home.

Yahoo! Finance User - Monday, January 26, 2009, 4:41PM ET  Report Abuse

• Overall: 2/5

How much more money are we going to throw at the banks and investment bankers which helped get us into this mess? Oh, and they and the treasury don't want to tell us where the money we've given them already has been used for. I wish someone would keep giving me a check and not telling me I had to account for it. We need a much simpler solution like reseting the mortgages of people faced with foreclosure to a fixed loan with a reasonable fixed rate (say 5.5 or 6 percent). If they can make the payment, they can stay. If not, they have to leave. Don't discount the amount of the mortgage or anything, make it for the current amount due on the house. They bought the house after all and if they stay in the house the market will bounce back. I don't like to see people suffer, but I was conservative in buying my home (had mortgage brokers and realtor saying I could easily buy and qualify for bigger, more expensive house), took out a conventional loan, and live within my means. I'm tired of the government using my money to bail people and institutions out for making bad judgments.