NY's 20th Congressional District

It has been a while since I've written, but I'm back.

I'd like to take a look at one of the items on the platform of one of the candidates for the 20th District special election in New York, Michael S. Pollok.

The item is regarding mortgage relief and the financial crisis. Mr. Pollok's proposal is the following.

Keep ALL homeowners in their homes by federal restructuring of mortgages based on fair market values and refinancing at fixed rates at 4% or less. This is not nationalization! A New Bank of the United States needs to be chartered to take over these mortgages. The interest going to the treasury.

He goes on further to say:

If a person would like to opt out he may do so and continue paying the interest and principle to the new US Bank. The private banks would be out of the consumer loan business but would be permitted to continue to make commercial loans under very tight regulation.

So to summarize, Mr. Pollok wants to nationalize all mortgages, but not call it nationalization, because he'll create a new private bank. Banks that currently hold the mortgages, well your screwed. This would be a violation of the Fourth Amendment since there would be no due process. Also as a seizure under eminent domain, there must be monetary compensation, which is not discussed at all. You would think that a lawyer would understand this.

Even if this was constitutional, it would be a very bad idea. This new bank would offer loans (and it fact would be the only bank allowed to offer loans to consumers) at arbitraily determined rates without taking into account the risk associated with the loans. Even worse, the bank wouldn't keep any of the interest. How will this help?

Where would the capital for this bank come from? Would the treasury supply it, leading to hyperinflation? What happens when people can't make payments, would the bank foreclose? If not why would people continue to pay? If so, how does this prevent the foreclosure crisis in light of layoff and rising unemployment.