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This is the stupidest idea I've seen floated in a while. Foreclosures occurred when people earning $60K bought houses that cost $400K. In more sensible times, someone earning $60K - with good credit and a 20 percent down payment - could not buy a house over $180K (three times annual income). Period. But thanks in no small part to the Community Reinvestment Act, lenders were allowed or perhaps forced to relax the requirements to qualify for a mortgage. Somehow, someone must have missed the fact that the mortgage industry arrived at the previously observed formula through experience. So, now we have a bunch of people who thought they'd be able to flip a house they couldn't afford before the payments went up. Eventually, though, all pyramid schemes - and that's what this is - collapse. Now we have a spate of foreclosures, which will not abate until home prices return to affordable levels. And, BTW, the more the FEDS attempt to avoid that simple fact, the longer it will take to return to normal.
By Lee Jones

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