Via John Crudele at the NY Post, serious consideration is being given to Bove’s idea: give homeowners new mortgages at 1% for 30 years guaranteed by a federal agency, a la Section 8 housing: “Let’s get back to the simple problem, i.e. too many people cannot pay their mortgages,” says Bove. “The simple solution is to find a mechanism to pay the mortgages.” Once that happens, he says, the securities these mortgages went into will be able to trade again. And all the other layers of securities built upon these mortgages will also start to regain their value. What mechanism can be used to pay the mortgages?
“The homeowner goes to the bank and applies to refinance the mortgage that he now cannot make payments upon,” suggests Bove. Rather than the bank taking over a home it doesn’t want, it qualifies the homeowner for a new 30-year fixed rate loan at 1 percent.” Read full article: http://www.nypost.com/seven/02192008/business/a_fresh_idea_to_deal_with_the_housing_cr_98324.htm?page=1