It won't work, says Commerce Bank founder and Metro Bank backer Vernon Hill.
Hill's responding, at my request, to US Rep. Joe Sestak (D,Pa.)'s proposal to allow unlucky homeowners who bought houses in 2003-07 to get new mortgages at lower prices, with the government eating the difference.
The plan looks "impossible to execute," and marks "another destruction of contracts and the rule of law," Hill told me when I sent him a joint press release summarizing and backing the plan, from Sestak and economist Mark Zandi of Moody's Economy.com in West Chester.
Sestak and Zandi say the subsidy would pay off in the form of fewer wasteful foreclosures and less value loss for other U.S. homeowners.
Veteran Chester County bank director and lawyer Jim McErlane told me the plan "sounds good," though he added in a note later that the program could "get complicated," especially for marginal buyers who haven't put much money down. And Gerry Cuddy, who runs Beneficial Bank, now Philadelphia's largest, said he'd rather see banks agree to cut rates, in some cases where that could prevent foreclosure, than tear up existing loan agreements.
More in today's PhillyDeals print column here.
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