This is a dumb idea. You can’t cure excessive debt with more debt. Furthermore, nobody in their right mind would sign on to a “full recourse” loan. Now, if people walk away from a bad mortgage, the bank gets the house back and that’s it. Of course, your credit’s ruined for 7 years but so what? Banks won’t be lending money for at least that long anyway. Right now, a good credit rating is worth approximately 1/2 a bucket of spit. With a recourse loan, not even bankruptcy can eliminate it. The borrower will be stuck paying with wage garnishments till the cows come home. So where’s the incentive to do this?
New, this fall on ABC, “Extreme Makeover, Home Equity Edition”!
Why don’t we just have government housing for everybody?