ARTS & FARCES internet

Anyone who thinks the US mortgage crisis has hit bottom is dreaming. Bad mortgages are going to continue to reset for years. Congress is contemplating overly-complicated solutions that benefit mostly the wrong people, while President Bush has ducked out and is relying on his experts. Both Congress and the Bush administration have self-serving agendas on this issue.

Here’s a simple fix without an agenda:

1. Congress immediately passes federal legislation that (a) returns foreclosed properties to mortgage originators; and (b) precludes mortgage originators from refusing to take title on foreclosed properties.
2. The states and/or local municipalities simultaneously pass legislation that raises the property taxes on foreclosed properties to 100% of the appraised value that the mortgage originator arranged.

You think that won’t light a fire under the asses of mortgage originators to negotiate a fair workout for those in trouble with their mortgages, allowing them to stay in their homes?

For this to work, the adjusted property tax responsibility has got to fall back upon the mortgage originators—the outfits that arranged the inflated appraisals, qualified the unqualified, and actually wrote all these bad mortgages—not necessarily the mortgage servicers. In many cases the originators have hidden their tracks, but the homeowners have original loan documentation and I bet they’ll be more than willing to help.

Will this benefit some flippers and freeriders and citizens who got in over their heads? Probably—there’s going to be icky problems with any solution to this mess, and some folks who shouldn’t will slip through the cracks—but it will help the greatest number of those who are in upside-down mortgages they can’t afford through little or no fault of their own.

Will some people still lose their homes? Sure, that can’t be avoided; most of them should have never been qualified for the mortgage anyway.

Most importantly, this plan puts responsibility on the crooks that arranged the inflated appraisals, wrote the inflated mortgages, and qualified the unqualified.

I’m not an economist, but this seems like a wholly workable idea to me. I call on the wisdom of the intertubes to point out where I’m wrong. Got a better idea? Let’s hear it.