St. Louis Real Estate - Did You Bail?

Last week was indeed a mess. Panic to the left of me, panic to the right, bail out, sit tight, . . .!

Thought I was going to lose it when I heard about the mortgage re-negotiation plan . . . sounded like a sure fire way to take a 5% problem and turn it into 15% problem overnight.

Anybody get excited when the news came out that there were 5 million mortgages in default because loans were issued to illegal aliens?

So the media does its thing. . . something like shouting “FIRE” in a theater and fear takes over.

That was last week. Today, last week is just a memory to the media . . . however . . .

I’m a fan of  John Hussman, President, Hussman Investment Trust, I think his news letter this week is worth sharing with you. Here are a few excerpts with a link to the entire article.

“The only thing we have to fear is the fearmongering of Wall Street itself.”

“Look - a few weeks ago, there was a $700 billion pile of money on the table, but the only way for Wall Street and bureaucrats to get their paws on it was to scare the public out of its collective gourd. They succeeded, but created the psychology that the U.S. was on the verge of depression if the bailout wasn’t passed. Having created that psychology, the crisis took on a life of its own. ”

“Property appreciation should be traded for mortgage reductions.”

“The proper way to address homeowner distress is not for the government to buy troubled mortgages and simply reduce the principal. That idea is utterly insane. If that policy was enacted, every homeowner in America would have an incentive to immediately go delinquent on their mortgage. Rather, Congress should provide for a relatively modest alteration in bankruptcy laws, allowing judges to write down mortgage principal but at the same time provide the mortgage lender with what I’d call a “Property Appreciation Right” (PAR) that would give the lender a claim on some amount of future price appreciation of property owned by the borrower. In that way, the mortgage lender would have the prospect of being made whole over time, homeowners who have faithfully made payments on their own mortgages would not be discriminated against, and homeowners in trouble would surrender some future price appreciation for immediate reduction in their monthly payment burden. ”

Read the entire article Four Magic Words: “We Are Providing Capital”

This entry was posted on Monday, October 13th, 2008 at 7:12 pm and is filed under Opinion, Real Estate News. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.