I suspect that even when the economy reaches a point of real recovery that there will be someone, somewhere stumping for another mortgage relief plan. Today’s edition is brought to you by Glenn Hubbard and Chris Mayer. It’s essentially a rehash of a plan Morgan Stanley touted a couple of months ago.
In a NYT opinion piece the two argue for a streamlined refinance program that provides new low cost mortgages to all. Underwater or not, anyone holding a mortgage guaranteed by any government mortgage provider would be eligible and it won’t cost them a dime. The free lunch lives, at least in the world these economists inhabit.
I wonder if it occurs to them or for that matter to the political class that all of this is beginning to wear a bit thin. Where is the piece of the action for the millions of homeowners who paid for their refinances? For that matter what program is going to come down the pike to put some bucks in the pockets of renters? And, while a further cratering of home prices might put the banks in a bind again, it would at the same time be a boon to prospective buyers. Who decided that the existing homeowner should be the winner at the expense of future purchasers?
Personally, I don’t see all of this happening. Joe Weisenthal on the other hand sees momentum growing for something big on the mortgage front, and sees something like this as likely. Calculated Risk does a nice job pointing out how badly Hubbard and Mayer have missed the boat on the mortgage crisis from the outset and then links to a previous CR post that points out the inconvenient facts of refinancing that they gloss over.