PIMCO’s Bill Gross Has A Big Idea…..Question: Is It Fair To Save The Irresponsible At The Expense Of The Prudent And Conservative?
Posted By thestatedtruth.com on August 20, 2010
  Aug 20, 2010
Â
Â
PIMCO’s Bill Gross Has A Big Idea…..Actually JP Morgan might have started these thoughts.  Question: Is It Fair To Save The Irresponsible At The Expense Of The Prudent And Conservative?Â
Â
Where is the bonus for being fiscally responsible?  Auh, there is none unless your in financial trouble!
At Tuesday’s conference on the Future of Housing Finance, Bill Gross suggested that anyone who was current on a Fannie/Freddie loan should automatically be refinanced to the current mortgage interest rate of about 4.5 percent. This should happen instantaneously, without underwriting.
Let’s see, everything has unintended consequences, so what’s the downside of this. Well, it reduces the probability of default because it reduces the present value of the loan balance and payments. It only rewards those who pay their mortgages on time (this is a stipulation?). And as Bill Gross pointed out, it would amount to an enormous stimulus (it also would be at least partly funded by foreign holders of MBS). And what about the non Fannie Mae mortgages? And what about the investors that wrote these loans?
Comments