This plan for dealing with the decline in home prices comes from a Republican economist. Its the best plan that I have seen thus far. It helps homeowners who are under water and unable to refinance their mortgages at the lower rates. It would keep many homes from going into foreclosure and help to stop the decline in real estate values. The loss of household wealth will also be staunched. This would help to restore spending and employment.
The plan will not be popular despite the impact that it would have on the economy and employment. It calls for government to fund some of the burden along with the banks that write down the principal. Those who are not underwater will resent those who get help, and some will not like to see the banks bailed out of another jam.
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