How to Help Struggling Homeowners Is Nothing New

24 02 2010

FDR’s Superb Fix for Our Housing Crisis.

And I like the kicker — some political peace would make me feel a lot better about my fellow Americans along about now!

Most important of all, by enabling thousands of Americans to save their homes, it strengthened their stake both in the existing order and in the New Deal. Probably no single measure consolidated so much middle-class support for the Administration.

Read to the end to get the gist of what’s really going on and why it isn’t working for those real Americans so rightly wronged yet so wrong about how to make it right:

“Every government foreclosure mitigation effort so far, including HAMP, has depended exclusively on carrots for the industry, usually designed by the industry itself. The industry’s lobbying efforts have successfully denied any stick to go with the carrots, notably the judicial modification of mortgages in bankruptcy (“cramdown”). The acquisition of mortgages by eminent domain will provide foreclosure mitigation efforts with a badly-needed stick.

In normal times, HAMP would better suit our preferences for limited government than HOLC. But the HAMP experiment has failed—and the foreclosure crisis is more dangerous now than it was a year ago. Fortunately, we have a proven method for solving it. We should use it.”