The government has been trying to stabilize the housing market for over a year with no luck. Here are three fresh ideas from the private sector that just might work.
What can the government do stabilize the housing market?Policymakers have been searching for an answer to that question for the past year as the tally of home foreclosures continues to surge and home prices continue to plunge.
So far, the Troubled Asset Recovery Program has been a disappointment, focusing more on shoring up the banking system than on addressing the problems of homeowners. While Federal Deposit Insurance Corp. chief Sheila Bair has been an outspoken advocate of mortgage modifications via rate reductions and term extensions, the Fed and the Treasury have been more intent on providing cheap mortgage financing via Fannie Mae (FNM, Fortune 500) and Freddie Mac (FRE, Fortune 500), and cutting interest rates in a bid to make monthly mortgage payments more affordable.
What's worse, even mortgages that have been modified often go back into default within six months, the Office of the Comptroller of the Currency said this week.
"Modifying mortgages is an unbelievably labor-intensive thing," says Len Blum, a managing director at New York investment bank Westwood Capital. "Each case is different." read more
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