house for saleDoes the housing industry need a bailout? Michael Feder, CEO of the New York-based real estate analyst firm Radar Logic, says it may. An oversupply of distressed inventory will have to be cleaned up before the housing market can come back, and that means large numbers of debt modifications will be needed, requiring lenders to take losses on their loans.

But Feder says the government itself may be in the worst position, since it has underwritten or guaranteed almost every new mortgage written since the financial crisis began. A great deal of that distressed housing inventory has been financed by loans that are, essentially, the assets of the American public.

By Feder's estimates, if the government liquidated all of the paper it holds in distressed mortgages, the bill to the taxpayers could be as much as $750 billion.

How can the government get out of this mess? In the video below, Feder looks back to the savings and loan crisis of the late 1980s and early 1990s, which led to the creation of the Resolution Trust Corp. He says a similar approach today could offer one solution for the housing industry's current woes.

Increase your money and finance knowledge from home

How much house can I afford

Home buying 101, evaluating one of your most important financial decisions.

View Course »

Advice for Recent College Grads

Prepare yourself for the "real world".

View Course »

Add a Comment

*0 / 3000 Character Maximum


Filter by:

Reverse Mortgage Company was extremely helpful and accommodating from the very first contact. Both their personal and professional cares were outstanding and we feel they performed with our best interest as their uppermost concern.

July 28 2013 at 6:33 AM Report abuse rate up rate down Reply

NO MORE BAILOUTS!!!!!!!!!!!!!!!!!!!

August 13 2010 at 11:44 AM Report abuse +1 rate up rate down Reply

Maybe you should do some articles on the home modifications. Many/Most people are unaware the the mods. include forbearance which ties the borrower into payment of the true balance of the loan 40 years down the line. The bank has only forgiven the intrest on part of the loan but has really turned it into a balloon payment that will never be paid but only delay the foreclosure to 30 or 40 years from now. My modification, and I had 60k down, still left me underwater with 70k due at the end of my new loan which Bank of America modified into a 40 year loan. I'll never be able to pay the balloon and I'll be dead long before the forebearance is due in the 70k lump sum. The banks and Freddie Mac and Fanny Mae should have been forced to just write the loan down now while all the bail out money was in place instead of pushing the problem down the road. This is the true reason as to why you are reading that the modifications are still ending up as foreclosures. No one in their right mind will stick with this type of modification when they can get a new house at a lower price and still own it down the road instead of just "renting" it and then hitting the market with a new round of foreclosures 30 to 40 years from now. It was just a stupid plan. I know as I am part of it.

August 08 2010 at 2:22 AM Report abuse rate up rate down Reply

Dear God please.. NO MORE BAILOUTS!!!!!!!!!!!!!!!!!!

August 07 2010 at 1:50 PM Report abuse +1 rate up rate down Reply

Let fannie and freddie file bankruptcy!!!! Time to dismantle this operation. No more taxpayer government bailouts!!!! Who ever votes yes, fire them at the time of their re-election. Americans this country is going down hill so fast we may not even have a November 2010 election!!!! STAND UP TO THIS REGIME AND HAVE YOUR VOICES HEARD BEFORE WE WILL BE SILENCED!!!!!

August 06 2010 at 4:09 PM Report abuse +1 rate up rate down Reply

Overall the banks refuse and/or very reluctant to refinance. This problem is now beyond the sub-prime demographic but also prime mortgages. Many people are now considering foreclosing or a short sell since their home valued has dropped puting them "underwater". This of course further effects other homes in the community. The banks don't want the reality of mark to market nor do they want mediation between the lender/lendee and a judge......ask the (r) they went against this solution.

August 05 2010 at 2:17 PM Report abuse rate up rate down Reply

No they don't need a bailout, the banks need to work with owners to re-modify rather than foreclose and then sell for half the original loan, which is what happening time and time again, no matter who you are.

August 04 2010 at 5:14 PM Report abuse +3 rate up rate down Reply
1 reply to carolkay's comment

The banks are not really modifying the loans which is what the problem really is. They refuse to take a hit for what they helped to create. They are doing forebearance instead and this will create a bigger long term problem.

August 08 2010 at 2:24 AM Report abuse rate up rate down Reply

Hey..come bail me out...I ALWAYS paid my bills and paid them on time....and all of a sudden..I hae to foot the bill for everyone else who couldnt resist that big ass house...or the fancy car to show off is what it is.....NOW if you CAN afford you cant get it, but if your COULDNT afford it...the government will get it for you....what a beautiful country we have here...if you are hard working middle class you are screwed !!! but if you are poor, and refuse to work...dont worry the government will buy you anything your little heart desires...oh and I am ther too..cause its my tax dollars at peeps need to stop bitchin cause they are losing their home while driving mercedes and yachts..nuff said

August 04 2010 at 3:52 PM Report abuse +4 rate up rate down Reply



August 04 2010 at 12:17 PM Report abuse +8 rate up rate down Reply
1 reply to cowlaf's comment

The problem is that the only people truly bailed out here are the BANKS. The people going broke is the homeowner. Have one of these banks post a true modification and you will see who was bailed out. THE BANK... The homeowner is still being held responsible.

August 08 2010 at 2:27 AM Report abuse rate up rate down Reply

read our lips--------------NO MORE BAIL OUTS.

August 04 2010 at 12:00 PM Report abuse +5 rate up rate down Reply