Another Dumb Solution by the New York Times
October 28, 2007
Moving Ahead on Mortgages
There have now been two “drumroll please” rollouts of plans to help rescue the economy from the worst effects of the housing bust. Each has only raised more questions about the best way to move forward.
Countrywide, the nation’s largest mortgage lender, pledged to help some 80,000 borrowers, and potentially many more, restructure their mortgages to avoid foreclosure. Countrywide seems to envision a loan-by-loan process, however, which would be too slow to keep up with imminent defaults and could all too easily result in inconsistent treatment of borrowers.
The Treasury Department has blessed a plan by Citigroup, Bank of America and JPMorgan Chase to form a fund to buy some mortgage-related assets. Banks could avoid having to sell those assets at fire-sale prices and avert losses that could tighten credit for everyone. But the banks seem to be having trouble raising money for the fund. Mortgage-backed investments don’t seem so enticing wh…