A New RTC to Avoid Foreclosure Crisis
The latest thinking on what to do with all the bad paper resulting from the foreclosure crisis is to create a new version of the RTC. This entity would buy the under-performing loans from current investors. Democrats want to ensure that this new entity will be more flexible in dealing with homeowners who want to avoid foreclosure.
There is already a ready, willing and able market for this bad paper. I’ve previously posted on how to avoid foreclosure with a new lender.
The difficulty has been that the investors who currently hold these toxic home loans are not willing to sell at prices that intelligent investors are willing to pay.
So the question becomes, “Will the government pay more for these mortgages than the open market?”
If so, why?
To anyone who’s trying to avoid foreclosure, there are plenty of options available if you know how to work the system. However, it’s clear that many homeowners are not equipped to get the best results on their own.
Every move the government has made since bailing out Bear Stearns has been to “avoid a crisis,” and “avert disaster.”
Many of the moves they’ve made to “avoid a crisis” appear to be moving us ever closer to disaster, in my opinion. Most of the decisions that have been made are addressing symptoms, not causes.
What’s also interesting is how many new tasks are being assigned to the Federal Reserve and the FDIC. At some point, there just aren’t enough resources to do everything that’s been asked of them.
This will likely lead to outsourcing, contracts that were not put up for bid, and sweetheart deals for the well-connected.
All this in the name of preserving the “system.”
The “system” sucks.
The system has been proven not to work.
While some of our “leaders” in Washington have not presided over the factors that led to this situation, many of them have been there for many years.
It’s time for new leadership, and it’s time for new ideas.
We need fundamental, systemic change on a lot of fronts- not just in the financial arena.
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