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September 24th, 2008
04:41 PM ET

A BETTER mortgage rescue plan

[cnn-photo-caption image=http://i2.cdn.turner.com/cnn/2008/images/09/24/art.howard.sosin.jpg caption="Howard Sosin, co-founder and former CEO of AIG Financial Products."]Editor's note: Here is a "Mortgage Rescue Plan" from the founder of a company that later created many of today's complex financial products. We'd like to hear your ideas, too. Thank you for sending us your comments.

Howard Sosin
Co-Founder and former CEO of AIG Financial Products

THE PROBLEM: The American economy is on the brink of a financial melt down that has been caused by a failure of the housing market. Our country needs a comprehensive solution to this problem that addresses the issues of both Main Street and Wall Street.

From Main Street’s perspective the problem is that housing prices, which were only supposed to go up, have fallen dramatically and continue to fall. Falling prices have exposed weaknesses in mortgage lending – an industry that has relied on price increases to hide poor lending practices. Extremely low down payments and complex interest rate structures that allowed buyers to acquire houses beyond their means have led to defaults and foreclosures. Main Street is hurting.

From Wall Street’s perspective the underlying problem is that mortgage backed securities have gone down in value, and even at dramatically reduced prices investors are unwilling to step forward to purchase securities. Furthermore, financing for mortgage backed securities is increasingly difficult to obtain, which forces sales, which exacerbates the problem. Wall Street is hurting.

THE SOLUTION: The Mortgage Rescue Plan outlined below encourages mortgage investors to voluntarily lower the outstanding principal amount as well as the stated interest rate on homeowner’s existing mortgages in exchange for a government guaranty of the modified mortgage. In exchange for these more advantageous mortgage terms, a homeowner would agree to share any future appreciation of his home (realized upon subsequent sale) with the mortgage investor and the government, in accordance with some equitable sharing rule.

This solution is simple, comprehensive and can be implemented quickly and inexpensively. It immediately lowers principal and interest payment on mortgages to allow homeowners to avoid defaults and foreclosures and to give them peace of mind that homeownership is a viable and valuable American dream. Simultaneously, it immediately liquefies mortgage-related securities allowing them once again to trade actively and be easily financed. Finally the solution is voluntary on the part of mortgage investors and homeowners and involves minimal government intervention.

THE PLAN: The government would announce that it is prepared to guarantee the repayment of principal and interest by homeowners if mortgage investors are willing to modify the terms of outstanding mortgages by reducing the principal amounts as well as the stated interest rates, and if homeowners are willing to share some of the future appreciation in value of their homes (realized upon sale). Here is how it would work:

After discussions with the government to set the terms (in particular the loan amount), the mortgage investor, if he so chooses, would send a term sheet to the homeowner describing the proposed modified mortgage. Upon receipt of the term sheet, it would be up to the homeowner to accept or reject the proposal.

New Loan Amount: A reduced loan amount would be proposed by the mortgage investor and approved by the government. The allowed reduction in loan amount should be based on published data telling how much housing prices have fallen in various regions of the country since a particular mortgage was written. It would be the government’s role to work with the mortgage lenders to see that reductions were sufficient to have the desired economic impact and appropriately sized to avoided moral hazard issues. All principal repayments on the new mortgages would be guaranteed by the government.

New Interest Rate: The rate could be either fixed or floating plus a spread. This spread would be divided between the government (as an insurance premium), the servicer (as a servicing fee), and the mortgage investor (as spread income). All interest payments on the new mortgages would be guaranteed by the government.

Loan Maturity and Repayment Schedule: Traditional maturities would apply and standard principal repayment schedules would be implemented.

Distribution of Funds upon Resale: Funds would go first to the government (to pay off the principal of the new mortgage), second to the homeowner (to reimburse him for his down payment in his original loan and improvements made to the house, if any) and to the mortgage investor (to make up the lost loan balance), and third to the homeowner and the government (to share residual profit). There are many possible equitable sharing rules for parts two and three.

QUESTIONS AND ANSWERS ABOUT THIS MORTGAGE RESCUE PLAN

1. What does this Mortgage Rescue Plan do that the Administration’s plan does not do?
This Mortgage Rescue Plan does something immediate and concrete for homeowners – it decreases mortgage loan amounts and interest rates, which decreases principal and interest payments thereby increasing the probability that homeowners can stay in their homes and neighborhoods.

The Administration’s Plan, provides no direct benefit to homeowners. Somehow the benefit of “fixing the financial markets” is supposed to trickle down to homeowners.

This Mortgage Rescue Plan does something immediate and concrete for mortgage investors – it provides government guarantees for vast quantities of mortgage backed securities thereby stabilizing prices and adding tremendous amounts of liquidity to the financial system.

The Administration’s Plan takes some illiquid securities off the market temporarily in the hopes that this action will “un-seize” the rest of the market.

2. How much will the Mortgage Rescue Plan Cost?

Besides administrative costs, there would be no initial outlay of funds by the government under this plan. A fund would be established to cover costs associated with defaults and foreclosures. It would have its own capitalization (see question #5 below) and would receive as additional funding the portion of the interest rate spread allocated to the government and the government’s right to receive amounts upon sale. The final cost to the government is not determinable, but if this Mortgage Rescue Plan is successful it should stabilize housing prices which would minimize future government outlays.

3. How will administration under the Mortgage Rescue Plan work?

The initial role of the government under the Mortgage Rescue Plan would be to encourage mortgage investors and homeowners to participate and to approve principal reductions that encourage economic growth. Over time there will be defaults and foreclosures, and procedure (much like those used by FNMA and Freddy Mac) will need to be developed to deal with them.

4. How long would it take to make the Mortgage Rescue Plan operational?

Once approved by Congress the plan could be operational in 90 days – 60 days for mortgage investors to develop and send out term sheets to homeowners and 30 days for homeowners to accept. In the interim, the Government could continue to lend funds to mortgage investors to support their illiquid securities.

5. How could the Government implement the Mortgage Rescue Plan?

One way to implement the MRP would be to establish an entity, which for working purposes we will call the “Mortgage Refinance Entity” (the “MRFE”). It could be housed in the Treasury Department, much like the Federal Financing Bank, or possibly as a division of the Federal Financing Bank.

The MRFE would have an initial capitalization agreed to by the Congress and the Administration. It would be the entity that would offer to the Investor the new mortgage security in exchange for an existing one. Having these securities issued by the MRFE would be an added benefit (particularly if the legislation makes the MRFE paper good collateral for the Fed discount window and TT&L accounts, which commercial banks establish for Treasury deposits.)

Howard Sosin was co-founder and former CEO and president of AIG Financial Products. He created AIG Financial Products with former AIG CEO Hank Greenberg as a joint venture. During Sosin's tenure, AIG Financial Products was one of the most successful creators of "boutique" financial products in the world, with all financial products hedged. There were large profits, no material losses, and NO credit default swaps or other credit derivatives (the primary source of AIG's recent failing). Sosin left AIG in 1993. The most recent CEO was Joe Cassano, whom Sosin hired and who built the credit derivatives business there in the late 1990's and early 2000's to a $500 billion insurance business (housed within a financial products company).


Filed under: 360° Radar • Economy • Howard Sosin
soundoff (41 Responses)
  1. Fred Pulver

    This is a great plan. It empowers the very people who have been and continue to be hurt by the collapse of the housing market.

    Do the Senators and Congressmen and women know about Howard Sosin's plan?

    September 24, 2008 at 11:29 pm |
  2. Richard

    Has anyone seen the McCain-Obama joint statement on this?

    September 24, 2008 at 8:21 pm |
  3. Josh Dean

    I feel that our economic leaders are acting like gamblers, asking us for more money because they finally have the game figured out and can “win it all back”.

    September 24, 2008 at 8:21 pm |
  4. Leigh

    I haven't heard anyone saying something like, "let's check the net worth of the combined Board of Directors for these failing companies and see if we nationalize THEIR wealth is it enough for the bailout ". Isn't it supposed to be the Boards that ensure safe Business Practices and set the tone for actions in the companies? Btw are any of these CEOs in violation of Sarbanes-Oxley rules?

    September 24, 2008 at 8:12 pm |
  5. Joe Mann

    I have a solution for the mortage bailout that will work and will benifit everybody. Instead of giving our tax money to the Mortgage giants which I approve of by the way not the bail out but something will need to be done here is my solution. Take the 700 Billion dollars intstead of giving it to the mortgage companys give it to mortage holders and potential buyers of real estate to pay on there mortgages which in return will have a positive affect on the companys stability and will give the american people instant equity and boost lagging real estate sales. It is a win win situation!

    September 24, 2008 at 8:03 pm |
  6. Caroline

    As a black, single-mother, I am a proud homeowner. I would like to see the bailout plan reduce the amount of my loan to match the current market value of my home. If wall street gets a fresh start, so should I.

    September 24, 2008 at 8:01 pm |
  7. Sharon, LA, CA

    I'm sorry but, former CEO and president? And we should listen to you now because? Too bad you couldn't help prevent the problem.

    September 24, 2008 at 8:00 pm |
  8. MaryJane Morrison

    This isn't really about the housing bubble, it's about the deregulation of the financial market that happened in 1999 - the repeal of the Glass-Steagal Act (1933). That deregulation took place behind closed doors, in a midnight session. It was passed by a Republican congress and signed by a Democratic President. The big financial institutions didn't want to be policed by sensible regulations, because they could make more money if they weren't. So they spent over $300 million in lobbying and political contributions to get the laws changed. It worked. They got the law changed. And the effect was that it turned banks and insurance companies into casinos (ie. securities companies). We, the taxpayers had no say in this matter. Our trusted elected officials were either too stupid know, or too greedy to care, that what the financial industry wanted was not in their citizen's best interest. So here are two questions that spring to mind? Why should taxpayers bail out corporations who subverted democracy to make a buck? And why should we entrust a $700 million bail out check to a government that either: A.) wasn't smart enough to see the likely effects of deregulation, or; B) wasn't ethical enough to care. Bush and Co. are asking for a blank check, with no strings attached. They need it now, no time for discussion. The sky is falling. Sound familiar?

    September 24, 2008 at 7:59 pm |
  9. Tricia, CA

    Get this plan to Congress now! This is a comprehensive plan not a hand over of $700 billion. I 'm sure that there will be additional questions to be answered – as pointed out by Cindy – but there is time to address those details.

    September 24, 2008 at 7:54 pm |
  10. Martie

    Mortgage holders have had more than ample opportunity to voluntarily reduce principal and interest over the past year or so to help homeowners who were sold predatory mortgages. They've had more than ample opportunity to discontinue economically hazardous lending practices. They have done nothing!!! Why worry about it now?

    And why would anyone even consider any solution offered up by industry executives who created the problem – especially since it probably includes more creative ways for you to rip everyone off.

    September 24, 2008 at 7:54 pm |
  11. Perry

    This plan doesn't sound good to me.

    September 24, 2008 at 7:40 pm |
  12. Beena k

    I think its a big mistake to bailout the big businesses.The money will only stay at the top. Have anyone ever thought of helping the citizens payoff their mortgages and student loans, there by freeing up money which they can then spend to stimulate the economy. The citizens have to pay back the back the billions that the government is spending on these big businesses. The people should have something to show for it. If the government pays off their student loans and mortgages , then those peolpe will in turn have money to put back into the market to keep it moving.

    If the banks were not so greedy and renegiotated with homeowners who were making and is willing to make their payments then they would have needed as much money today. But since its now a known fact that the government is willing to bail them out why negioated since its a win, win situation for them. To hell with the home owners who will be stuck withthe balance of a short sale, no home and bill collectors harrassing them till they day they die or win the lottery to pay off that monkey on their back.

    We as Americans now live in a society that is not helpful to the poor or working class who wants to get ahead. If we listen to the experts on tv who states that many Americans should never have gotten a home to begin with, well that maybe true for some, but they fail to realised thatmany of us are either out of work through no fault of our own and have had to accept any job to make some type of income.

    Now thanks to Bidden and his sons and thier Credit card business, none of these homeowners will be able to file bankruptcy to get a new start. Now who cares if they can never have good credit again, or if they can ever have another home? No one! Especially not the government and their friend big business.

    But we as good Americans are now burden with our own bad debt plus that of big business and is expected to carry the burden and be quiet.

    Well folks America is really broke and so is themajority of its people. Those experts need to take off their jacks and get down to the working class level to really taste how bitter the salt really is for them.

    September 24, 2008 at 7:36 pm |
  13. luna

    here's an idea...... instead of giving $700 billion to the millionares that commited mortgage fraud and bail them out of the hole they digged for themselves, why not give $1 million to each of us (we are only 350 million) and what will each of us do??? pay our mortgages, spend money and pop it back in the economy. it certaintly is a cheaper solution than $700 billion........ hahahahahaha

    September 24, 2008 at 7:33 pm |
  14. Jan from Wood Dale IL

    Who benefits from any equity of these homes? What assurances are in place for people who didn't have the funds to begin with will be able to maintain their property, which can also affect the market value of other homes in their neighborhood? What happens if these homeowners fail to pay their property taxes, who gets claim to their home - the county or the federal government?

    Your plan benefits only companies like yours, and not those homeowners who have saved and have properly financed their mortgages and property but still see the market value of their homes go down.

    September 24, 2008 at 7:25 pm |
  15. Maureen, Newman California

    Michael - I am betting that Palin will suddenly have laryngitis.

    September 24, 2008 at 7:23 pm |
  16. Dani, Seattle

    Cindy from GA.

    I wonder who you would save a millionaire, billionaire, trillionaire or whatever- or the people that were taken by these greedy thieves?

    I for one would love to hear their stories, because I KNOW not all of these people said to themselves, uh I really can't afford this but I'll do what you want me to do...come on. You know that there were dirty tactics going on. Why don't you seek out a family in your area that has been foreclosed on and listen to their story...see what their side of it is before you JUDGE so completely. Because you know why CINDY, I actually talked to someone that knows about the housing market. My brother's friend is a real estate agent, and he told us that many people that he knew that were either getting their homes foreclosed or close to it needed attorneys because they were getting taken. He said his industry in real estate has become very cutthroat, and that's why he's getting out of it. Also, he told us that alot of homeowners that may have lost their jobs due to the economy can't afford to get out of their house, because they're not selling....hmm that wasn't hard for me to understand. So I just want you to think about what you said. It sounds very elitist. There's always two sides to a story, and when our leaders in this country right now are not very credible. I would like to know both sides of a story. I'm not a low information voter.

    September 24, 2008 at 7:22 pm |
  17. Maureen, Newman California

    Whatever is negotiated here, can certainly be accomplished without the "help" of John McCain for two hours while he attends the debate with Barack Obama. I think that John Boy overestimates his value.

    It's obvious that the McCain camp has ulterior motives here. They need time to cram info. into their incompetent Alalkan puppet's head.

    September 24, 2008 at 7:17 pm |
  18. Gene Steiker

    First we had a crisis in Iraq. Saddam Husein was going to deploy "weapons of mass destruction." According to the Bush Administration, the ONLY possible solution was to send the military and give out more contracts to their cronies at Halliburton and the other defense contractors.

    Then we had the oil crisis. Prices going through the roof. According to the Bush Administration, the ONLY possible solution was to pay more to their cronies at Exxon, Chevron and the other oil companies for gasoline and heating oil.

    And now we have the economic crisis. The stock market indexes and home prices are in plummeting. According to the Bush Administration, the ONLY possible solution is to bail out their cronies at AIG, Citibank and the other financial firms.

    Do you think there is a pattern here?

    September 24, 2008 at 7:15 pm |
  19. robert

    The movie that this so-called crisis most closely resembles is the 1967 George C. Scott movie "The Flim-Flam Man." Paulson and Bernanke, the water boys for the Wall Street Fat Cats, have got everybody running scared with their sleight of hand and hide the ball tactics.

    These mortgages started failing two years ago, the economy continued to sail along uninterrupted. The only difference now is that there is an election in 5 weeks. After the election there will no longer be any pressure on any politician to do anything. That is why the Fat Cats are crying "We have to have a bail-out now."

    We've had a dozen recessions since WWII and come out of every one of them just fine. We will always have another recession regardless of what happens on Wall Street. Recessions are as inevitable as death and taxes. They are a necessary part of the business cycle.

    September 24, 2008 at 7:01 pm |
  20. Benton

    I propose a variation on this proposal. I agree that the financial institution should hold the mortgage and future risk. I agree that the financial insitution should be provided an incentive to re-negotiate both principle and intrest on existing mortages to keep people from foreclosure. And I agree that, upon resale, a portion of the appreciation should be shared with the US Government and the financial insititution. I suggest 50% to the homeowner and 25%/25% to the financial institution and the US Government. I would further offer this incentive to former property owners who were foreclosed on in the las 18 months...to put these people back into their homes and to restore their credit ratings. However, I recommend that we give financial insititutions a corporate tax credit on all re-negotiated mortgages. The credit could be taken over five years. The tax credit would be the loss paper loss sustained by the financial insititution by issuing a new mortage at a lower amount. The loss of future interest would not be allowed to be taken as a tax credit, although it could be taken as a tax deduction. No tax credit would be offered for any foreclosed properties....again, the incentive is to re-negotiate mortgages and reverse foreclosures. Furthermore, if any financial institution accepts this program, they cannot deduct any compensation expenses for five years for the top two levels of management in the company. This program pretty much covers the concerns of regular US citizens. First, people are kept in their homes. Second, financial insititutions are partially covered for mortgage losses. Third, the companies (and shareholders) are penalized for out of control executive compensation and lack of board oversight.

    September 24, 2008 at 6:52 pm |
  21. Keith

    I'd like to see a demographic of where those mortgage foreclosures are happening.

    Why are we not hearing on CNN from those people who are in need of mortgage assistance?

    As has been pointed out already on CNN many of those who bought a home they could not afford was due to community organizers forcing banks to accept applications from people who really could not afford to buy those homes.

    September 24, 2008 at 6:46 pm |
  22. Mike in NYC

    It's time to face the sad fact that many people lack the financial wherewithal, the requisite intelligence, or both, to live the American Dream.

    There was certainly fraud and misrepresentation on the part of mortgage brokers and lenders, but if you can't do a rough appraisal of your own financial condition and come to an honest assessment as to whether or not you can afford a home, then you're probably not cut out to be a homeowner. You'd almost certainly be better off renting. Sure, you wouldn't be building any equity, but your life would be much simpler and more stable.

    Honestly, I'm in no mood to save people from themselves.

    September 24, 2008 at 6:44 pm |
  23. EJ (USA)

    I am proud of the American people for finally standing up (in mass) to Bush and his administration and saying "No!" – There is a first time for everything!

    September 24, 2008 at 6:42 pm |
  24. tracie

    Does anyone honestly believe that McCain is going to Washington, D.C. for any other reason than to avoid showing up for a debate that he is not prepared for. He has a Vice President nominee who is receiving a crash course in politics and does he honestly believe that he will have a better grasp on the economy after a trip to D.C.? He consistently demonstrates his lack of knowledge on the United States economy, when on a Monday he is for something and on Tuesday he is against the same thing and by Friday, he is actually for and against something on the same day. Give me a break, if he were prepared for the debate he would attend. End of story!

    September 24, 2008 at 6:26 pm |
  25. Patrick

    The Democrats are to blame for this mortgage meltdown! Cooper, do a timeline from 2001 starting with Bush sharing concern! Facts will show Dems and Sen. Schummer from NY are to blame...

    September 24, 2008 at 6:25 pm |
  26. Jordan

    This plan includes only one position of homeowners, those that have same or better income then at the time of obtaining last loan.What about people that make less then at that time, people that lost jobs, or those that dont make that many hours at work as previous years with plenty of overtime or those that are about to lose a job. Only solution is if all problematic homeowners have to go trough new loan approval and then go from there.
    My solution is that Fed buys off all illiquid assets with a clause from the same companies to buy them back incrementally within 3 years period with interest. In case of bankrupcy that those assets have a priority with interest.

    September 24, 2008 at 6:04 pm |
  27. Gary Chandler in Canada

    Before bailing any borrower out check what their stated income was, compared to real income!!!
    Only those borrowers who were bamboozled by false predictions of variable rates can be considered victims of predatory lenders.
    In many cases there were THREE guilty parties, Borrowers, Brokers, and Lenders looking for Equity, Commissions and Quotas!

    September 24, 2008 at 6:00 pm |
  28. William LaValley MD

    Paulsen and Bernancke preside bedside of a patient whose heart has just stopped pumping – with only a few minutes of blood supply oxygen to go. Treatment must be immediate using the best of whatever is available. No time to wait and debate about the merits of her trans-fatty donut consumption over the past 4-5 years.

    Save the patient, treat now – before the oxygen runs out, or treating a short while later may be too little to late.

    The market is stopped, and the oxygen is the time the market is willing to wait before it loses confidence. Once the oxygen is gone, resuscitating the patient doesn’t change the outcome. Once the market confidence (oxygen) is gone, even heroic measures are insufficient.

    We must act decisively now, and rehabilitate the system later… The patient is in critical condition so we need first things first. Treat now, debate later. Make the rehab program well-planned and well-executed.

    September 24, 2008 at 6:00 pm |
  29. LNP

    I think this is a much better start than to ask for 700 Billion without a plan of where it will go.

    September 24, 2008 at 5:52 pm |
  30. Brad Holt

    If we're bailing out everyone that bought a house and couldn't make the payments then I think the government should give me a house too.

    Stupid me, I couldn't afford it so I didn't get one – now all of these "homeowners" are gonna get off scott-free!

    September 24, 2008 at 5:50 pm |
  31. Amanda Schmidt

    I have a better plan. The Federal Reserve should take the 7 billion dollars and directly bail out the American people. Our home has been on the market for two years because we need to relocate so that we are not commuting an hour each way to our jobs. In the past two years the value of our home has been consistently depreciating. Why can't the Federal Reserve purchase our home so that we can in turn purchase a home from another family that is also suffering from the slumping housing market and rising cost of living? It could start a chain reaction that could create a powerful suge to the economy and get money circulating again. Then the Federal Reserve could sell all the homes they purchased a couple years down the road when the market recovers, and easily get a return on their investment.

    September 24, 2008 at 5:37 pm |
  32. George D. Knapp, PE

    So long as we have a $700,000,000,000 trade deficit and a $500,000,000,000 budget deficit the overall economy will be unable to create non-real estate jobs to allow citizens to pay for home mortages. The unbalanced concentration of jobs and investment in the real estate sector over the last decade has created the problem. However, it was the only commercial section of the economy that could create jobs. Unless we balalce our foreign trade we can not cure the financial problem.
    As Pogo said " We have met the enemy and he is us"
    We, the citizens must cure this problem.
    We will only create more dictators , ie. "czars" if we expect government to do this for us.
    Thank You.

    September 24, 2008 at 5:31 pm |
  33. Jackie Komarowski

    I am glad to hear that, McCain is willing to set aside the politics, during this "difficult crisis time" for our country!! I would also hope that Obama would join him. I also do not feel that, "we the taxpayers" , should foot, the bill of this banking & corporate industry mess!! Nor should the CEO's, still be able to receive their FAT BONUS incomes!!! We, the taxpayers didn't make this mess, so we should not be paying it!!!
    Jackie In Wisconsin

    September 24, 2008 at 5:26 pm |
  34. Larry Masterson

    What is proposed is basically a reverse mortgage. It could be implemented with the existing holder of the security or with the government if the bail out plan has the government acquiring the security.

    It puts the burdon on the homeowner to reveal if he or she is thinking like someone who just wants to stay in his or her home or is thinking like a real estate speculator. It's a good means of sorting the sheep from the goats, wheat from the chaff, etc.

    September 24, 2008 at 5:23 pm |
  35. Todd Wertz

    Dear Mr. Dobbs
    I am a school teacher from middle Tennessee, and tired of being the middle class citizen who is always getting screwed. 1 Trillion Dollars for bailout big buisness. I don't think so! Why not bail out middle class Americans. My plan would is to give everyone that has a morage payment $ 50,000 to 100,000 dollars to pay down thier morage. the banks would be getting this money anywhy that would help the bank. That would also leave me with extra money at the end of the month to spend on consumer goods that would help the economy. Any American Citizen that does not own 1 house and/or does not have a morage payment would get $50,000 to 100,000 if they purchesed a house that was being foreclosed on. This would help the housing market. Any banking employee making more than $100,000 would have to take a pay cut for 5 years making no more than 100,000 or face federal prosecution. That would teach responsiblity. Any persons or buisness that filled for bankrupcy in the future would only have a porition of the dept forgiven wages garnished until dept is repayed. Any bank that loaned money to persons that filled for forecloser would only recieve particle payment for loans not payed back. Someone other than those people that pay thier bills should suffer and learn a little responsibility. I grant you that there are some figures that need to be looked at a little more carefully, but it got to be a better plan than what is out there now and it would definitly help us struggling Americans.

    Todd Wertz
    Middle Class Respnsible American

    September 24, 2008 at 5:23 pm |
  36. Heather,Ca,US

    I bought my house the old fashioned way,I looked around for a house I could afford with 25% down. I refuse to be held financially responsible for corrupt and greedy indivuduals who engaged in fraudulant and criminal acts with these mortgage transactions. You cant get something from nothing. I want the FBI to hunt all of these execs and the people who falsely stated income down and put them in prison. Whatever happened to if you dont make enough income you dont qualify for a home loan. No more excuses, what has happened here was going to happen it was only a matter of time. Its any outrage and its shameful. Its also criminal. I have absolutely no intention to pay for the bandage on a wound that I and millions of other people who did the right thing are not responsible for.

    September 24, 2008 at 5:23 pm |
  37. JC-Los Angeles

    The horrid state of our nation is not the result of the failing housing market but rather the allowance of years of fraud without oversight.

    Unless our nation installs a system of checks and balances to control the fraudulent behavior of seemingly everyone, the thieves will most likely move from real estate into "universal healthcare."

    I can just hear the conversations now: "hey, if everyone will get healthcare, universal healthcare, then it would stand to reason that every American could be a target for our scams."

    As Toto showed us in The Wizard of Oz, just pull back the curtain and you will see that the powerful are just frauds using smoke and mirrors.

    It's time to address the fraud, pull back the curtain and expose the horrendous and crooked leaders and finally install a system of oversight; unless we do, we'll soon need another $700 billion for universal healthcare fraud.

    September 24, 2008 at 5:18 pm |
  38. Cindy

    Well this plan sounds nice but is it really? It just leaves a lot of questions for me...

    What happens if these people never sell their homes? Then the government never gets their money back and these people get our money for free.

    What if the homeowner dies does the house have to automatically be sold so the money is gotten back?

    And what if they end up losing the house in the future because they still can't pay for it then how do we get our money back from that?

    Plus what about all of the houses that have already been foreclosed on? Do these people get a break too or just the ones that still have their houses?

    And last but not least if the people in foreclosure get such a great deal with a lower interest rate then is that fair to the people who were responsible and paid every month on their house and are in good standing but still have a high interest rate? That doesn't seem fair to me!

    Cindy...Ga.

    September 24, 2008 at 5:17 pm |
  39. Robben Salyers

    Mr Sosin:

    I do like your idea... However, I think the heart of the problem "NOW" rests with the misguided use of otc derivatives that are being sold and traded in the back room operations of companies that are making a market in credit swaps and derivatives...

    If you want to truly solve the crisis on Wall Street and on Main Street then be of help and call those you know and make an effort to bring this otc derivative trading to a standstill.

    The trading of over the counter derivatives is the cancer that eats away at us.

    September 24, 2008 at 5:17 pm |
  40. Michael

    Again , McCain again shows he has no appreciation for the intelligence of the American people and brings more dishonor to this presidential election.
    Obama and his campaign should immediately run ads ,,to decry this as a political maneuvering. Yes this is a critical time and Americans are suffering but this manueveur is truly low and transparent ,,,with the truly limited financial experience and understanding of finance what will McCain really be doing in Washington?? ,,, maybe study (finance) for the debate??? I'm sure Palin will not be able to make her debate either ...maybe she will need to 'step in ' and solve a international crisis and Biden will be invited to join in to assist,,,, ummm what will they come up with next??

    September 24, 2008 at 5:11 pm |
  41. jim

    There shouldn't be any rescue plan. They should let the chips fall as they may. We probably would have a deeper recession but nothing like the one in the Jimmy Carter Presidency. That one had a 21% prime rate $18% inflation rate and 22 % unemployment. That close to being in a depression. The bottom line is the American people would be $700 billion dollars less in debt.

    September 24, 2008 at 5:07 pm |