The government is considering buying up millions of the mortgages itself, and then allowing the homeowners to refinance on better terms.
Given that the coming tidal wave of Alt-A mortgage defaults could be devastating to our already-depressed economy, I’m not opposed to the idea.
Of course, America is broke, and we don’t have the money.
On the other hand, the funds would come from money already approved by Congress for the bailout, and would not represent new commitments.
It’s smarter than most of the idiotic things the government is doing with taxpayer money. At least it would actually help some people, and might help to mitigate one of the many sources of the crisis.
True, it rewards those that made poor decisions, and penalizes the rest of us. But if the government insists on skinning the taxpayers to give bailouts, at least it may be a better use of money than, say, forking it over to wealthy bankers.
Update: Mish slams the proposal.