My views is exatly the opposite. By setting in law what will be done, you insure fairness to all. No need for judges to decide how much a mortgage should be reset. Either the occupant can pay at a rate that will hopefully give the investor a better return over the life of the mortgage, or he cannot.

Precisely. Which is why I resolve the issue by requiring the court to decide whether or not a payment of 70% of the current mortgage could be sustained by the home occupier. In my scheme, the investors is not consulted, he has no right to interfer with what the law says.

And if you have a situation in which both parties benefit by not going to court (and this happens a lot), then they can work it out by themselves.

One huge problem with mortgages is that it’s not clear who the mortgagee is supposed to renegotiate with. If you have the mortgage sold and resold to a hundred different people, then who do you ask forgiveness from?

I’ve been looking a lot at Islamic banking and thinking of some of the techniques used there would have made the system more stable.

ReformerRay: My proposal says that the courts will not act until they receive a petition. My proposal says they will now act in a different way than formerly.

My one view is that you probably don’t want to leave too much in legislation and if you want to give judges the power to force a mortgage reset, you probably ought to just let the judge do anything that they think is fair.

The trouble with this is that this is not going to happen before January. Democrats tried to give bankruptcy judges the power to reset mortgages and the Republicans said no. This might change under the Obama administration. It really is an issue of political strategy. You have a limited amount of political capital and the question is what do you spend it on.

My proposal says that the courts will not act until they receive a petition. My proposal says they will now act in a different way than formerly.

The difference between the current bankrupcty code and my proposal is that bankrupcty today is initiated by the investor. My proposed law will require action by the courts, independent of the wishes of the investor. Quite different.

Twofish has exactly the right perspective. He just needs some help.

We need to focus on a critique of every idea presented in this forum.

On the other hand, surely my ideas have more problems other than “the Congress will not accept it”. Come on, Twofish, spend a little more time on the issues and come up with an answer to how either of my proposals will harm the U.S. or can be improved.

Because I think Twofish is wrong, I think drastic changes in U.S. laws are the proper course of action.

It has to do with my background as a physicist. What happens is that when you come up with a new or an old idea, you have to subject it to what can best be described as an intellectual gladiatorial match, with the notion that any idea worth keeping will survive this sort of combat.

lb: i hate to break it you amigo, but this entire system disproportionately helps the rich. when you’re not rich, that becomes a little more clear than when you are.

That’s one reason the system stinks and we need to change it. I don’t see the purpose of making the system even *more* beneficial to the rich than it currently is, which is what happens if you kill taxes.

lb: “and anything requiring Congressional approval will take a year.” …you mean like TARP??? or the last rebate?

TARP is a good example. You had the Fed and Treasury and the President and the leaders of both parties all saying that it was an emergency must pass bill, and it very nearly didn’t.

lb: The numbers also don’t work out.” how so??? just because you (or anyone else) say it so does not make it so.

You have roughly $3 trillion in revenue. If you don’t want to cut spending, then you have to borrow $3 trillion in Treasuries, and that I don’t think that the markets can absorb that much borrowing.