Tags: Shiller | government | seize | mortgages

Yale’s Shiller: Government Should Seize Mortgages to Ease Housing Crisis

By    |   Monday, 25 June 2012 09:11 AM

Renowned Yale economist supports a radical solution to the nation’s housing crisis: a government seizure of underwater mortgages through eminent domain.

The idea, which Shiller credits to Cornell University law professor Robert Hockett, entails the government paying investors fair market value for the mortgages.

“Then it [the government] can pay them [the mortgages] off at fair value, or a little over that, with money from new investors, issuing new mortgages with smaller balances to the homeowners,” Shiller writes in The New York Times.

Editor's Note: This Wasn’t an Accident — Experts Testify on Financial Meltdown

“Taxpayers are not involved, and no government deficit is incurred.”

Investors can feel confident they will get their money back, as homeowners will no longer be underwater, Shiller argues. Underwater mortgages are those worth less than their face value.

“The original mortgage holders, the investors in the new mortgages, the homeowners, and the nation as a whole will generally be better off,” Shiller says.

That would allow the housing market to rebound.

Of course all of the housing market’s stakeholders would have to buy in to the idea for it to work.

“We need to summon our resources to exercise the authority that allows collective action,” Shiller says.

The biggest problem with the idea may be ideological. Very few Republicans would approve of an idea that involves such massive government intervention.

Cries of “socialism” would surely ring out in loud decibels. Unless Democrats score huge victories in November, the idea is unlikely to go far.

Editor's Note: This Wasn’t an Accident — Experts Testify on Financial Meltdown

© 2019 Newsmax Finance. All rights reserved.

1Like our page
Monday, 25 June 2012 09:11 AM
Newsmax Media, Inc.

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

America's News Page
© Newsmax Media, Inc.
All Rights Reserved