Shiller on housing fixes: a Great Depression primer
Specifically the pages on the Great Depression.
He says the U.S. has "to consider the possibility that the housing price downturn will eventually be as big as that of the last truly big decline, from 1925 to 1933, when prices fell by a total of 30 percent."
So far, Shiller believes, "actions that have already been taken are not impressive." He suggests thinking big.
Among the changes made to deal with real estate troubles during the Great Depression, he notes, was the formation of the Home Owners Loan Corporation "to sponsor loans for those having trouble making payments, replacing short-term mortgages — then typically five years with a final balloon payment that was often hard for homeowners to afford — with much more sensible 15-year ones that were fixed-rate and self-amortizing."
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Comments
On house payments to mortgage obligations. The shiester loans perpetrated upon the greedy home owner is disasterous. Interest only loans, nothing down, with adjustable rate mortgages. The home buyer that couldn't afford a house otherwise, took the bait and hoped to unload at the top of the housing price, before the arm kicked in. Now wants special legislation or help cause he isn't making his payments, cause of the market drop, probably owes more than the house is worth. Didn't the conservatives in Washington see this coming when they changed the bankruptcy laws to make it harder to file bankruptcy, when they first came out with these relaxed mortgages. I say file bankruptcy or let the mortgage holder have the house. Don't expect the government, or the citizen's to bail you out. Your greed on both parties put you there.
Posted by: Ray Juneau | November 25, 2007 9:59 PM