Posted on Friday, November 5, 2010
Here are three programs that are considered promising replacements for the government’s Home Affordable Modification Program (HAMP), which has failed to stop foreclosures.
Fannie Mae and Freddie Mac would be encouraged to refinance loans for some 30 million borrowers with high-interest rate mortgages. The new mortgages would be folded into a new round of mortgage-backed securities issued by the government-sponsored finance firms.
The right-to-rent plan would offer delinquent borrowers an option of renting their foreclosed homes at a market rate for five years. At that point, owners turned renters would have another chance to buy their homes at market value. It’s a compromise. Borrowers lose their homes, but lenders have to accept lower payments.
Mortgage cramdowns give a bankruptcy judge the right to consider all of a borrower’s debts and create a solution that would force all interested parties, including holders of mortgage debt, to compromise.
Source: Reuters News, Alina Selyukh (10/29/2010)