I had hoped to pen a considerable article about the Obama administration's currently (rumored) mortgage "cram-down" plan. But I won't have time until after Wednesday of this week (at which point I'll revise this article and spell out the arguments) [Note, I've decided to just contribute my thoughts in the form of comments below. I may write a more formal essay later, but for now I'm just going to argue in real-time].
But in case anyone wishes to discuss in the interim, have at it.
In short, I think mortgage cram-downs are a terrible terrible terrible idea. I agree that something needs to be done regarding the flood of foreclosures. But I'm more for an "orderly devaluation", if you will. I'd slow down the process, and put more effort into being thorough. I'd go after those who committed mortgage fraud aggressively, lenders & borrowers. I'd also go after lenders, borrowers and home builders who exploited or outright avoided taxes.
But I would not punish responsible homeowners who've been paying their mortgages, along with responsible savers who waited to buy, along with the struggling people who are working 2-3 jobs just to barely make the mortgage they can't really afford by _rewarding_ the worst of the worst.
Yes, this plan punishes someone who's working 3 jobs to just make payments, and rewards his lazy neighbor who'd rather sit around and whine for a bailout. And don't get me started on the banks/lenders. Yet another bailout for them? The government will "match" their loan workouts?
This is getting ridiculous.
--- More on why my plan to allow foreclosures to take place in an orderly fashion *helps*, later. First I must make a living...