Ben Bernanke: Fresh Attack on Mortgage Rates

Lower all mortgage rates to 4% and watch the economy thrive. Expedite Social Security Disability hearings and save Americans.

Ice Block D of AZ 11:30PM December 04, 2008

I like it--relatively easy, the infrastructure is in place, and the solution is bottom-up instead of "here's your blank check, Wall Street. Don't worry about telling us how you'll spend it".

One per customer, primary home only. We've got 10 yrs left on our 15 yr mortgage at 4.8, so current rates are not helping. If we could refi for 10 years at 3%, we'd be able to pay off bills and get back into the consuming economy. And it would help forestall a lot of foreclosures.

anxious american of MI 1:47PM December 04, 2008

Have a 30 year FHA at 6.5% and was recently offered 5.75% without a credit report, or new appraisal. Wonder if that number could go lower with the same terms and conditions. Current mortgage is 12 months old without a late payment.

R Spencer of TX 8:34AM December 03, 2008

Reward the 93% of the US population who have been prudent and still have (rapidly disappearing) equity in their houses, have good jobs, have low debts and savings. Why reward them? Because it is in everyone's interest to do so because they are the smart and prudent workhorses of our society and they will stay smart and do the right things if we encourage it. How? Use the full faith and credit of the United States to allow such persons *before the end of this year* to refinance their mortgage rate to the same rate as the 30 year treasury - ie 4.17%. On a 500,000 mortgage, this would save each household $7,200 annually in house payments compared to current mortgage rates. No tax credit needed, no hocus pocus, no bailouts, no rebates. This kind of thing has been done before, notably during the return of soldiers from WWII. In that time, you could get a below market loan from the govt and it generated a sustainable housing boom, brought the US out of a major post war recession, and started perhaps the longest boom in the history of the world and made the middle class the most solid group of taxpayers and producers the world has ever seen...and it was seen as a justifiable REWARD to the greatest generation. Now, let's save ourselves by rewarding THIS generations best and brightest families and breadwinners.

Ominously, some of these prudent financial actors took out 5 or 7 year ARMS, and by resetting the mortgages to 30 year mortgages, we can avoid the onrushing domino of truly horrifically massive mortgage resets that will happen in 2009 thru 2013 which if not prevented will doom the whole world to financial and other forms of darkness.

How would it work? The Treasury would instruct both Fannie and Freddie to make available to solvent, verifiably job holding, credit worthy (min 725 FICO score) current and potential new homeowners for only their principal residence a 30 year mortgage at the 30 year treasury rate plus 1/4 point. This would take off the table the ARM mrotgage resets disaster waiting in 2009 -13, it would meaningfully reduce house payments for literally millions of financially savvy households, making such money available to purchase new consumer items such as *automobiles* which such individuals would be more inclined to spend because their breakeven nut has been reduced, and their cash flow has been improved. An improvement in the idea might be to actually allow citizens to further buy down their interest rate to even as low as 2 or 3% so that these economically mature and wise households could provide even further tax producing and gdp growing economic activity resulting in JOBS.

But what about the banks? Isn't it the business of banks to lend money to this market? Yes. Are they doing it? Not really. They've just been scared within and inch of their lives, and instead of serving the economy by making prudent loans, they are stockpiling cash in truly obscene amounts or buying other banks. What are they doing with the new capital they've received? The are BUYING TREASURY BILLS rather than spend the money. So, my argument is that if the banks won't provide the loans, someone *must*...and RIGHT NOW. Policymakers are pushing on a string - and the string is glued to the table - so that logjam must be broken up. And after all, the banks will make good money servicing these loans, and will realize pdq that they had better start using that bailout money because their mortgage market has temporarily gone missing, and they therefore MUST aggressively look to make loans for good risks in other markets such as supporting small businesses, new ventures and other loans.

David Gobel of VA 10:00AM December 02, 2008