9. It is extremely unclear how the government will price the problem real estate assets. Priced too low, the real estate markets will be worse off than if the bail ot did not exist. Priced too high, the taxpayers will take huge losses. Without a market price, how can you rationally determine value?
10. The proposed bankruptcy “cram down” will severely negatively impact mortgage markets and will damage well run institutions. This will provide an incentive for homeowners who are able to pay their mortgages, but have a loss in their house, to take bankruptcy and force losses on banks. (Banks would not have received the gains had the house appreciated.) This will substantially increase the risk in mortgage lending and make mortgage pricing much higher in the future.
Of course, I received this in an email from a friend yesterday –
… if a form of this bill doesn’t fly it won’t matter what happens to real estate pricesâ€¦.nobody will able to get a mortgage anyway.
We’re all amateur economists now – as a Realtor, I need to figure out how my clients will be/may be affected.
And finally, perhaps my favorite Tweet of the week –