Michelle Malkin » Hillary’s socialist housing bailout plan

Michelle Malkin » Hillary’s socialist housing bailout plan:

"In her address to about 250 people in a Derry elementary school gymnasium,
Clinton criticized unscrupulous mortgage brokers who push customers into
borrowing more to pad their commission or are dishonest about the true cost of
the loan. To help curb the number of foreclosures, Clinton proposed setting up a
$1 billion fund to assist homeowners in making arrangements with lending
companies to stay in their home. She also discussed the lack of affordable
housing, an issue that is particularly a problem in New England. To promote more
affordable housing construction, Clinton proposed another $1 billion fund which
would be distributed to state, county and local affordable housing
programs."

I have two issues with this. One is that the only way her bail out program can work in my opinion is if it doesn't forgive the loans, but restructures them. An example might be how some student loans are handled. I had a number of student loans that went into default, but the government was able to help me through a program called the William D Ford foundation. It didn't erase those debts, but it made them more manageable and got me a slightly better interest rate. A similar program could work for home owners, they would still have to pay off the loan, but plans could be set up to make that easier. An additional condition would be that when and if the house were sold - all proceeds of the home must first go to paying down the loan before the owners could take any of the money from the sale. That would mean that some people would receive no money for selling their house and still owe money. That is harsh, but truth be told, they took the risk of buying a house, and I think that they should face the consequences of that gamble.

Second is that if she wants housing to be more affordable, the easiest and best way for that to happen is to allow these bad debts to collapse. As they do, the houses that were purchased with those bad debts will go back on the market. With the increase in supply the prize will go down.