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<p><strong><em>The Wall St. Journal</em> offers this "modest proposal" for dealing with the mortgage crisis:</strong></p>
<p><strong>How to Stop the Mortgage Crisis</strong></p>
<p class="times">The potential collapse of house prices, accompanied by widespread mortgage defaults, is a major threat to the American economy. A voluntary loan-substitution program could reduce the number of defaults and dampen the decline in house prices -- without violating contracts, bailing out lenders or borrowers, or increasing government spending.</p>
<p class="times">The unprecedented combination of rapid house-price increases, high loan-to-value (LTV) ratios, and securitized mortgages has made the current housing-related risk greater than anything we have seen since the 1930s. House prices exploded between 2000 and 2006, rising some 60% more than the level of rents. The inevitable decline since mid-2006 has reduced prices by 10%. Experts forecast an additional 15% to 20% decline to correct the excessive rise. The real danger is that prices could fall substantially further if there are widespread defaults and foreclosures.</p>
<p class="times">Irresponsible lending created new mortgages with LTV ratios of nearly 100%. By the end of 2006, the fall in prices caused 7% of mortgages to have LTV ratios above 100%. A further 20% of mortgages had LTV ratios over 80% and will shift to negative equity as prices decline. <a href="http://online.wsj.com/article/SB120485260049218269.html?mod=fpa_mostpop"><strong>More...</strong></a></p>
<p class="times"><strong>What do you think? Modest proposal? Indecent proposal? Or?</strong></p>
<p><img alt="" src="http://farm3.static.flickr.com/2398/2098042107_dfff75d69d_o.jpg" /></p>
<p><strong>How to Stop the Mortgage Crisis</strong></p>
<p class="times">The potential collapse of house prices, accompanied by widespread mortgage defaults, is a major threat to the American economy. A voluntary loan-substitution program could reduce the number of defaults and dampen the decline in house prices -- without violating contracts, bailing out lenders or borrowers, or increasing government spending.</p>
<p class="times">The unprecedented combination of rapid house-price increases, high loan-to-value (LTV) ratios, and securitized mortgages has made the current housing-related risk greater than anything we have seen since the 1930s. House prices exploded between 2000 and 2006, rising some 60% more than the level of rents. The inevitable decline since mid-2006 has reduced prices by 10%. Experts forecast an additional 15% to 20% decline to correct the excessive rise. The real danger is that prices could fall substantially further if there are widespread defaults and foreclosures.</p>
<p class="times">Irresponsible lending created new mortgages with LTV ratios of nearly 100%. By the end of 2006, the fall in prices caused 7% of mortgages to have LTV ratios above 100%. A further 20% of mortgages had LTV ratios over 80% and will shift to negative equity as prices decline. <a href="http://online.wsj.com/article/SB120485260049218269.html?mod=fpa_mostpop"><strong>More...</strong></a></p>
<p class="times"><strong>What do you think? Modest proposal? Indecent proposal? Or?</strong></p>
<p><img alt="" src="http://farm3.static.flickr.com/2398/2098042107_dfff75d69d_o.jpg" /></p>
