Let’s be honest with ourselves. Even if the outgoing Bush team or the incoming Obama administration can work out a scalable nationwide mortgage restructuring scheme, we will still have a housing problem in the U.S.. Specifically, we should expect a high proportion of restructured mortgages to default again within a year. In a piece that appeared on Bloomberg this morning, Alex Stricker and I suggest that a more centralized process is needed to manage the flow of foreclosed properties onto the market, and we discuss some alternative ways to implement this idea.
There may be better ways to do this and we are completely open to suggestions – please post as comments here. We only insist that this is one dimension of U.S housing that needs further careful consideration.