Can you spot the problem here?

…would you sell the rights to future appreciation to an investor who also is willing to absorb losses that might be incurred should prices go down?

A group of Rockville, Md., financial engineers is betting you will. They are developing an instrument called a home appreciation participation note that addresses the affordability issue facing many buyers and the risk that the house they are purchasing could fall in value…

in return for future house-price appreciation, the investor makes a sizable cash infusion so you can afford the house you want — or keep the one you’re in now.

Not too hard to see, huh? Doesn’t this sound a little uncomfortably like what we’ve just been through—investors helping people get houses they otherwise can’t afford?

But there is no skepticism at all in this syndicated piece in the Los Angeles Times (I don’t see the column in any other publication) by Lew Sichelman. Hey, maybe this is the answer to all our problems and will allow us all to buy better houses (or condos, for some of us), but if it sounds too good to be true…

First of all, the term “financial engineers” ought to be a red flag to any reporter or editor. These geniuses are a big part of why we are where we are now. When ever you hear “financial engineering” substitute “gaming the system” and you’ll be better served.

And re-read this—doesn’t it sound bubblicious (emphasis mine)?

The more the investor puts up, and the more affordable the house becomes.

In other words, in return for future house-price appreciation, the investor makes a sizable cash infusion so you can afford the house you want — or keep the one you’re in now.

Nothing like incentivizing people to buy houses they may not be able to afford so you can profit if they’re able to somehow afford them. And the homeowner still could get socked:

Selling your home-buying risk, as well as your reward, is “still somewhat of a gamble,” because there’s no telling just how far values could fall in a particular market, Cassidy acknowledges. But in the examples above, values would have to fall by 20% to 30% before the decline affects your bottom line, depending on how large a roll of the dice you sold.

That could never happen! Seriously, where’s the context in this piece? Why print what’s effectively a press release for financial engineering in housing? I’m not saying there’s no value at all in this idea—especially for people who are under water—but come on.

This is a bad show by Sichelman and the LAT. This piece could have run in late 2005 or early 2006 at the height of the bubble and still been lousy journalism.

With all we know now, there’s just no excuse for it.

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Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR's business section. If you see notable business journalism, give him a heads-up at rc2538@columbia.edu. Follow him on Twitter at @ryanchittum.