Word: loaning
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Dates: during 2000-2009
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...quickest way to help the auto industry would be to make sure that no one in the U.S. defaults on a car loan. Certainly the government could make sure that people who are employed and do not have a history of being deadbeats get a portion of their car loans paid. When cars are repossessed and go onto the market to be sold as "used," that drives down the entire market for similar vehicles. A surfeit of well-maintained cars available at prices well below new ones undermines the ability of Detroit to get its sales back up without having...
...part of the Treasury, could give banks the money to help qualified car buyers keep their vehicles. A man sitting in his house looking out the window could see a car he is helping to pay for sitting in the next-door neighbor's driveway. A really clever car-loan bailout program would allow the taxpayer to use his neighbor's car as compensation for his higher taxes. (Read "Four Steps to Ending the Foreclosure Crisis...
...there are also plenty of people who might be able to keep their homes with a lower interest rate or a longer loan period. In many cases, this is in the best economic interest of the mortgage holder, since up to half of a house's value can be lost in foreclosure. And yet often--especially when the loan has been chopped up and dispersed to investors around the globe with a third-party servicer in charge of collecting payments--that's not happening. "Servicers don't have the right incentives," says Christopher Mayer, professor of real estate at Columbia...
...high, meaning that we'd be spending money only to delay the inevitable. Part of what drives up the redefault rate, though, are changes that don't lower, or may even increase, a borrower's monthly payments. A lender that re-amortizes missed payments over the life of the loan might see doing so as a compromise--but that doesn't mean the mortgage becomes more affordable. That's why the FDIC insists that modifications reduce payments at least 10% and take up no more than 38% of a borrower's gross income...
Again, though, let's not hail a solution as the solution. A targeted tool like loan modification is probably a more useful allocation of resources than a blanket policy like cheaper mortgages. Since half of all repossessed-home sales are in just four states (California, Michigan, Ohio and Florida), we can focus efforts there...