On Thu, 27 Mar 2008 15:47:43 -0400, Wayne.B
wrote:

On Thu, 27 Mar 2008 10:42:47 -0600, Vic Smith
wrote:

Whose business it anyway if lenders choose to write bad loans?
Doesn't hurt me.

That's naive. If the government ends up bailing out the lender "to
save the economy" who do you think ends up paying for that? Sooner or
later we all do, either in taxes or with a depreciated dollar.

You know what I think the solution is?

You freeze all those entry level mortgages before they reset. In
return, the GSE's buy the paper from the banks and sits on it.

In return for having a mortgage freeze, borrowers agree to the
following: Not sell the house for a minimum of 10 years. No equity
loans. When the term is finished, 30% of any profit on a sale rolls
over to the GSEs right off the top. That establishes a floor.

Secondarily, the GSEs, can redistribute the risk by picking the
performing loans to keep and wholesaling the non-performing loans into
Junk Bonds.

Win-win.