Like so many other investors, the past week has my head spinning with the latest news of a massive government bail out of yet another distressed industry. There is, undoubtedly, a great deal of blame to go around but I think most people would agree that at the bottom of the crisis is a boat-load of bad loans.
One strategy, therefore, for averting future crises would be to look for a way to minimize bad loads. To this end, I was intrigued by this recent article, The Mortgages of the Future, which suggests that the banking industry create a new type of mortgage — "continuous-workout mortgages."
Not being a finance person, I can’t speak to the specifics of the idea but given the current state of the housing and banking markets; now seems like the perfect time to "unlearn" our old way of doing business.
