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Anthony Sanders of George Mason University argues principle write-downs will only cost the taxpayer a lot of money.
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As we speak.
The White House wants mortgage giants Fannie Mae and Freddie Mac to allow debt forgiveness for some underwater -- principal forgiveness.
The cats once again the US taxpayers would foot that bill.
Anthony Sanders is professor of finance in the school of management at George Mason University Tony getting you to be here.
Would this be allowed allowed will this happen.
Well -- this came from the -- Brookings institute.
Panel -- -- mr.
DeMarco spoken gave us the results I was the only person in the room ecstatic because what he said was.
I'm not doing anything yet we haven't studied this enough.
And and again -- -- and that's that's fantastic -- What what it.
Back -- will it will get into the moral hazard of all of this and whether it's right or wrong in a second but would it make any difference because we're talking about I think eight.
A little less than half -- million mortgages about foreigners 65000 mortgages would it make any difference broadly speaking to housing market.
-- -- this is small slivers of met eleven million underwater we're talking about maybe as low as 100000.
So this a drop in the bucket.
But it opens pandora's box for a lot of bad behavior.
Right it because its moral hazard and why are you selecting these people who are under water and not others and can.
Can the White House even answer that.
I'm an element it's essentially like the super lot of that -- just one last week -- and again they're gonna put it out there and only a few people get it.
And I I hazard to think other gonna select those people but.
There there's no actual there's other than anecdotal stories no one has any solid evidence that any -- the principal writedowns will work.
Other that'll cost the tax -- a boatload of money.
A -- on top of what we -- have already contributed to Fannie Mae and Freddie Mac which by the way the tax Payer.
Owns Fannie Mae and Freddie Mac we essentially in directly control the entire mortgage market in this country.
That does beg the question of why don't we take Fannie and Freddie since government controls them.
And do something is there something that could be done that may be isn't principal forgiveness -- would help right housing.
Oh sure absolutely and it.
Ed DeMarco was talking about forbearance which no one understands what that -- all -- means is you take your underwater amount and push it off interest free to some future date.
Everyone likes forgiveness.
Obviously but there's other things out their Bank of America came out with a great pilot program -- sounds like it.
Where there transition troubled households from the mortgage and -- running.
And that you know there's a lot of other alternatives out there the Freddie Fannie and the banks are doing to help consumers out.
It principal reductions really.
For -- particularly from his taxpayer's point of view the would remedy of last resort and -- no evidence that'll actually do any good whatsoever.
And that has great saying Anthony Sanders one of our friends on FaceBook goes -- -- in person being well.
