Money | Joseph Stiglitz The Government Needs to Start Buying Mortgages Economists Joseph Stiglitz and Mark Zandi have a plan to fix the housing market By Kevin Spak Posted Aug 13, 2012 1:59 PM CDT Copied In this file photo taken July 21, 2010, a "bank owned" sign is seen on a home that is listed as a foreclosure on a HUD website, in Hawthorne, Calif. (AP Photo/Reed Saxon, file) Five years after the mortgage crisis began, housing is still one of the biggest factors dragging the economy down. There's just one option left, economists Joseph Stiglitz and Mark Zandi write in the New York Times: Mass refinancing. "Well over half of all American homeowners with mortgages are paying rates that would appear to make them excellent candidates to refinance," they observe. But they can't because the collapse "has wiped out their home equity." So they're supporting a plan, which has been introduced by Sen. Jeff Merkley, to help underwater homeowners refinance, setting up a government-backed trust to buy their mortgages while they build up equity. They'll have three years to refinance, during which time they'll pay a modest interest rate. The program will thus cost taxpayers nothing, while working "like a potent tax cut," all while freeing up lenders to seek new loans. Without government help, expect "significant pain and a long wait" for relief. Click for Stiglitz and Zandi's full column. Read These Next Her blood isn't compatible with anyone else's. Rubio says the fate of Iran's conversion facility is what matters. Some of the most explosive Diddy allegations are dropped. Fan who taunted Ketel Marte's mom has been banned by MLB. Report an error