In other words, there's a lot of value out there in the difference between what a house is worth on the market, and what it's worth to the people who have been living in it and don't want to move.
Yes, and that's often a negative number. Let's take a sample jingle mail case.
If a homeowner took out an $800,000 loan to buy a place, and can replace that house for $500,000, what's the point in staying in the $800,000-mortgaged property, other than to make sure that homeowner has an additional $300,000 debt burden (or, in your scheme, that the Fed takes on some or all of that debt burden.)
Foreclosing on all of them makes all of that value simply disappear from the economy.
So driving home prices down to the level where they might be affordable again? Is that a problem?
And, more to the point, you're once again conflating the issue of foreclosure with the issue of the liquidity of mortgage backed securities. The issues may be related, but they are not the same thing.
no subject
Yes, and that's often a negative number. Let's take a sample jingle mail case.
If a homeowner took out an $800,000 loan to buy a place, and can replace that house for $500,000, what's the point in staying in the $800,000-mortgaged property, other than to make sure that homeowner has an additional $300,000 debt burden (or, in your scheme, that the Fed takes on some or all of that debt burden.)
Foreclosing on all of them makes all of that value simply disappear from the economy.
So driving home prices down to the level where they might be affordable again? Is that a problem?
And, more to the point, you're once again conflating the issue of foreclosure with the issue of the liquidity of mortgage backed securities. The issues may be related, but they are not the same thing.