The state of Massachusetts has an interesting approach. …

The problem now is the large numbers of mortgages and lenders and borrowers. It’s huge. Can you imagine every state AG and courts trying to sort this out. No way.

Who cares what your house is worth… what matters is what it costs for shelter.

We need to disabuse our people about investing in their homes.

In fact the notion of wealth accumulation from investments is kinda dumb.

How about another paradigm?

Another excellent point. I like the way you’re thinking outside of the box here.

Yes, the idea of investing in housing has come a cropper because it wasn’t left outside of the markets. If we can modernize the banking system to protect mortgages from this disaster, then maybe investing in housing can return as an idea.

But, for now, we do have to look at some basic ideas about cost of living and building costs and property taxes and real fundamentals.

This is one reason I was suggesting about a year ago that we need to find other ways for people to invest and grow rich without having cash in their pockets that always inspires price inflation. Where can one sequester their investments so that speculators won’t pump & dump it?

It’s important because we’d like everyone to grow more wealthy and share in the nation’s wealth, but if it’s just increased wages, then the retail industry will just increase their prices and take it all back.

As per usual, Hillary was on top of this and had concrete solutions for the problem. Media would rather focus on how much she is a bitch. And how inspiring Obama’s speeches are. … But the best solution for all of our problems is a great speech, delivered via teleprompter between 8 flags with a bright blue background. Thank god we can check off the race problem because Obama had the courage to speak about it. Isn’t he wonderful! We all love a parade and a good speech!

Sucks don’t it? — an Edwards supporter

But, that’s Democracy. The majority, regardless of their attention span or sanity, rules (mostly). Let’s pray to the deity of our choice that his abilities are beyond his cult-like supporters mentality.

There is a hope that in a democratic system that not only will the desires of the majority be satisfied, but that somehow quantity becomes quality when a majority agree to something. Science has shown that’s not true, but we pretend to believe it with regard to politics. Let’s hope our majority know what they’re doing.

There is a lot of pump and dump going on and people are looking for ways to get out of the market. Why would anyone play in the market now?

You have a good point, but there is a dynamic which occurs over time which investors should notice.

As the mortgage crisis causes some crashes here and there, there will also be stocks which are pretty sound made available for cheaper prices. Invest away!

The roller coaster ride will be rough for those most directly involved in the real estate business, but for others there has to be some buying points where investors can shift their dollars/euros/pesos/etc.

If they stay dynamic and shift resources then the market might not be hurt too bad. But, of course, the housing sector will take some time to get reorganized and fully recover.

And, I agree with one poster about exceptional situations: there has to be some way to deal with multiple mortgages where it’s not simple speculation and there has to be ways of handling any odd situation without just ignoring those and letting people sink in the quicksand. So, some kind of special “help” has to be available for those.

Of course, the Banking Modernization Act needs to be modernized!

The system, markets, lenders, speculators, banks, brokers, home owners, regulators and whom else needs to be looked at?

Support the market!
Distribute the losses with government taking the shock.
Save the homeowners.
Let speculators handle their own situations.

What about punishments or rehabilitation of law with regard to brokers, land speculators, mortgage lenders and other opportunists?

And, having a degree in math, as does kiddo, i resemble that remark. (But not anywhere near enough to actually contemplate being insulted).

Yes, that’s true. You’d have to break the tranches up. It can be done.

But wouldn’t you have to buy them in order to do that?  How would that set a market point for the things that are not purchased.  It sounds like the idea is to set some formula to calculate a discounted value on such things based on certain assumptions about the future real-estate market and then the Fed offering to purchase them.  Of course unless for a particular residence all the holder of bonds bases on parts of that mortgage happened to have sold to Fed there would be no way to give the mortgagee the relieve described.  It would be an expensive way to help not that many people and would really just be a bailout for bond holders who were so cash strapped that they were forced to accept the Fed offer.

I like the idea of going at it from the other end of bankruptcy reform and letting the "free market" sort out the bond holders.

That prices rose to record heights, by far, over median income seemed not to concern anyone but fuddy duddies like me. Humpty Dumpty can’t be put back together again. It will be several generations or maybe never hopefully, that insanely easy credit is allowed to inflate real estate again. At the heart of it were the GSE’s, Fannie Mae etc. bought up ever more dodgy mortgage paper with funds garnered at below market rates because of their implied government guarantee. Well at least until 3 years ago when it was realized what a mess they had. Thousand of green eyeshade guys have been now working for years trying to figure out their books and are only now getting a handle on it.

When they had to pull back and start reducing their holdings one of the most bizzare events in economic history occurred. Foreign central banks lead by China bought around $700 billion of it. Making matters more weird is that they got hardly any premium at all over Treasury paper. Just wait until the Chinese people learn that they have lost 50% on the principal and 25% on the currency translation on the deal.

So anyway then the GSE’s had to pull in their horns the ‘free market’ stepped into the breach for the last exciting years of the bubble. The fact is that the worst of the worst MBS’s are not GSE paper but Wall Street generated stuff which is a bit more difficult to get a fence around.

Again I will say it. Any plan to save homeowners or the banks is an exercise in pony searching. Somehow or other 2 or 4 trillion dollars is going to have to be written off. Enough of it is on the books of the commercial and investment banks that to take the losses would destroy them so every plan starts and ends with saving them. I doubt any plan will be highly successfull but they are going to try and that means you Joe and Jane citizen is going to pay.

That problem is solved by amending the bankruptcy code. The holders of the mortgages in CDOs or SIVs or whatever get what they get the payments that the Judge decides, or that the parties negotiate.

I agree that is the best way to help mortgagees, but of course that would do nothing to make the existing mortgage based bonds more certain in value.  And of course if the Federal Reserve is to insure those things, as it seems it has to some degree, then any amendment to the code like that would probably be "scored" in congress as costing the taxpayers real money and the Republicans could say that it violated PAGO.