Posted on Monday, January 25, 2010
If a prposal does not meet this litmus test it will cause more problmes than it solves in the long run;
1. Encourage folks who cant realistically afford their home comfortably to move on and give them the tools - within reason - to do just that.
2. Reward people for living within their means in an affordbale home.
3. Reaward people for paying down their mortgage with the goal of owning their home free and clear.
The deficiency is the elephant in the corner here. Any plan to address that needs to do so fairly so people whioh made good choices are not penalized att he expense of those who did not, banks and their shareholders are not forced to take losses/can make their own decisons over what makes sense. Maybe tax breask tied to payments made against deficiencies or wrtie downs.
The soluitons now need to be more long term.
Government lend low rate mortgages to repay deficiencies.
Tax credits to banks and borrowers to assist with deficiency payments and losses
Buy down underwater mortgages. Grant to cover part.
(verses forcing banks to write down without and possibility of recovery – goes to bank roll in this/they took a risk, but not that government would force principal write down))