Saturday, February 23, 2008

Surely they wouldn't do this

Or would they?

It's a US election year, after all.

One of my favorite US Blogs, Maxed Out Mama, reports that the Bank of America has a pretty cozy plan to deal with bad mortgages. Here is an excerpt.

A brief summary:
  • BofA will buy the Congress Critters. It is an election year and money is tight, so it will get them at a deep discount.
  • The Congress Critters will pass a law saying that the Federal Government (that's you) will buy bad mortgage loans at a "deep discount".
  • Then the Federal Government will write the loans down to where the people can afford to pay them (you will pay the unaffordable excess of their mortgage balances.) Don't forget to keep paying on your own mortgage while you are paying theirs!
  • The borrowers will keep their homes, but now they will owe less because you will have paid it off to where they can afford it.
  • The federal government (that's you!) will now guarantee the loans so they can be sold back to the banks at FMV. If the new loans go bad, the federal government (that's you!) will pay the noteholders off. If they perform, the noteholders (not you) will get the profit.
If you read to the bottom of her post, you will find an infinitely more prudent solution.

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