The rate would then rise to four percent in 2010, though it’s unclear what would happen after that.

Hovnanian called the crisis a “problem of supply and demand,” which he believes can be solved by making homes affordable to everyone.”

Um. Ok. Problem of supply and demand, eh? Let me go waaay back to my Econ101 class, where I think they mentioned something about supply vs. demand. I’m not too bright, but lemme see if I can summarize:

Too little inventory for demand, prices go up.
Too little demand for inventory, prices go down.

How about the completely quite building houses, and drastically slash prices to clear out inventory?

Remember, we’re now in the USSA. Everything are belong to us.

good question to debate, though… which is more evil, US Government or US Finance Corporations?

Chuck Ponzi

PS Igor says “concerned”. There are often unintended consequences when government crowds out free enterprise. But, then again, roads, schools, and protection services are “taken over” by the government. In addition, public health services are highly regulated or public owned. How do we naturally draw the line? Perhaps government SHOULD be the main housing finance lender. That’s a debate worth having, as I am sure I could argue either side.

Perhaps you’re right. But if you’ve parsed Hovnanian correctly it opens some other issues. Yesterday’s Fannie bill sales themselves got yields around 3 percent. I think we’d be talking about a sovereign takeover of the entire mortgage finance sector.

I think he means that they’d actually be 3% fixed loans. And that if you didn’t take advantage of that, it would be higher the following year.

It’s actually not a bad idea if it’s along with stringent underwriting. We’d probably make more money than with our $700B bailout.

The USG can be the lender of last resort. Everyone would refinance if they could to the new rates. It would free up a lot of pent up demand.

Chuck Ponzi

Is this a good idea to keep people in homes, and free up disposable income to help keep the economy rolling?, and will it shore up home prices? sure it will.

But, remember, that immense capitalistic greed rules this country.

Will the bankers ever figure out that keeping people in homes, keeps money flowing to them, shores up the prices, and lowers defaults?

The banksters are naive and dumb, they don’t see real people living real lives, they just see dollar signs.

Dropping rates that low would decimate banksters profits, their is just no way.