Michael Barr testifies on what needs to be done to prevent waves of foreclosures from driving everyone’s home values so low that we wind up undershooting the bottom:
As explained further below, we need new legislation to unlock the securitization trusts so that servicers have the authorities they need to sell loans to Treasury at a steep discount. Treasury can then restructure them, include a shared equity feature to protect taxpayers, issue new guarantees on the restructured loans, and sell them back into the market, helping homeowners and restoring liquidity and stability to our markets.
I’ve written on this previously.
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