Comments on: Ben Bernanke – Sackless Wonder http://www.brunoandtheprofessor.com/2007/08/ben_bernanke_-_sackless.php Bruno and the Professor is a progressive, liberal weekly talk radio podcast covering issues from Seattle, the United States, and the World Mon, 12 Jul 2010 03:39:29 +0000 http://wordpress.org/?v=2.9.2 hourly 1 By: Bruno http://www.brunoandtheprofessor.com/2007/08/ben_bernanke_-_sackless.php/comment-page-1#comment-5342 Bruno Fri, 17 Aug 2007 20:05:04 +0000 http://www.brunoandtheprofessor.com/2007/08/ben_bernanke_-_sackless.php#comment-5342 Krugman has a nice compromise in his <a href="http://select.nytimes.com/2007/08/17/opinion/17krugman.html?" rel="nofollow">op-ed</a> today. He says that it used to be the case that the bank would re-negotiate the terms with the borrower in order to prevent foreclosure, which was a hassle for both parties. But they can't do that anymore, b/c the mortgage has been packaged and sold off. So he suggests: <blockquote>The mechanics of a domestic version would need a lot of work, from lawyers as well as financial experts. My guess is that it would involve federal agencies buying mortgages — not the securities conjured up from these mortgages, but the original loans — at a steep discount, then renegotiating the terms. But I’m happy to listen to better ideas.</blockquote> Krugman has a nice compromise in his op-ed today. He says that it used to be the case that the bank would re-negotiate the terms with the borrower in order to prevent foreclosure, which was a hassle for both parties. But they can’t do that anymore, b/c the mortgage has been packaged and sold off. So he suggests:

The mechanics of a domestic version would need a lot of work, from lawyers as well as financial experts. My guess is that it would involve federal agencies buying mortgages — not the securities conjured up from these mortgages, but the original loans — at a steep discount, then renegotiating the terms. But I’m happy to listen to better ideas.

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