CLEARING THE MORTGAGE MARKET THROUGH PRINCIPAL REDUCTION: A BAD BANK FOR HOUSING (RTC 2.0)

CLEARING THE MORTGAGE MARKET THROUGH PRINCIPAL REDUCTION: A BAD BANK FOR HOUSING (RTC 2.0)

Abstract

This paper examination of why mortgage markets have not cleared since the bursting of the housing bubble. It considers the range of possible market clearing strategies and presents a proposal for clearing the market via negotiated, quasi-voluntary principal reduction using a privately-funded Resolution Trust Corporation style entity (“RTC 2.0”) for pooling and standardized restructuring and resecuritization of underwater mortgages. Such an RTC 2.0 would provide a framework for implementing “quasi-voluntary” principal reductions in the context of a litigation or regulatory settlement or the federal government’s exercise of its secondary market power to exclude non-compliant financial institutions from FHA insurance or access to the GSE market.

Paper below…

~

4closureFraud.org

~

CLEARING THE MORTGAGE MARKET THROUGH PRINCIPAL REDUCTION: A BAD BANK FOR HOUSING (RTC 2.0)

Leave a Reply