Thanks to U.S. Senate Bill 896, the "Helping Families Save Their Homes Act of 2009", as amended with Senate Amendment 1036, the "Protecting Tenants at Foreclosure Act of 2009", tenants are now entitled to stay through the end of their lease, and receive 90 days notice prior to eviction after a foreclosure through out the country.

read more

Part eight of a nine-part series.

The housing bubble has caused enormous problems in the U.S. economy. To make sure this crisis doesn't recur, we should:

• Require income-based appraisals for lending purposes. Home prices should be able to rise as high as buyers are willing to bid, but loans based on federally insured deposits or reserves should be limited to amounts that are reasonably supported by local-area incomes. Private lenders should be allowed to lend as far beyond that as they desire, but only with limited recourse against the borrower and without taxpayer support for losses since such support creates a clear incentive to lend incautiously.

read more

Part seven of a nine-part series

After significant internal debate, I’ve concluded that repudiation of excess mortgage debt is the only workable solution to the current crisis. I don’t suggest this solution lightly as it has not only national, but also geopolitical implications since foreign central banks hold so much U.S. debt. While some people believe debt repudiation would lead to a complete lack of confidence in U.S. obligations and, in turn, lead to a total financial collapse, I believe the opposite is true. Our failure to mark the value of investments to current market prices and take necessary losses only increases the fear of investing in these instruments. Our refusal to see the plain simple truth that we cannot repay these obligations has frozen our credit markets and, as counter-intuitive as it first seems, debt repudiation is likely the only way to restore lender confidence and get credit flowing again.

read more

Part six of a nine-part series.

Many people insist that taxpayers shouldn't "bailout" deadbeat homeowners. But the typical argument--that homeowners created the current situation and should take personal responsibility for their own problems--is wrong.

read more

Part five of a nine-part series.

Now that we've identified negative equity and the unprecedented burden of household debt as core issues in today's housing crisis, the next logical question has to be how we can resolve these issues. Below I’ll explore the solutions that have come to my attention and in the next post, I’ll provide my take on what we should do.

read more

Part four of a nine-part series.

So far, we’ve looked at the factors that created the credit and housing bubbles and the beginning of their demise. As prices leveled off in 2007, speculators and borrowers who had subprime loans realized further appreciation was unlikely, so they simply stopped making payments and foreclosures rose. The possibility of this outcome appears to have been completely unforeseen by lenders because their models simply didn’t account for the fact that borrowers might default and, even worse, that those defaults might lead to losses. In August 2007, lenders woke up and removed from the market the majority of the more aggressive home-loan products that had propped up home prices.

read more

Part three of a nine-part series.

We've seen that the credit and housing bubbles worked together to create an apparently golden economy that would never end under what some felt was the almost God-like leadership of former Fed Chairman Alan Greenspan. So what brought this nirvana-like period to an end?

Anyone who has turned on a TV or picked up a newspaper has had the word “subprime” beaten into his or her head ad nauseam. But in fact, borrowers who had subprime loans wouldn't have had any reason to walk away from their homes if the new-economy elite had been correct in their belief that--thanks to the sophistication of their financial products--home prices would only go up. Instead, borrowers who had subprime loans would have simply sold their homes at higher prices.

read more