Those who view the current problems with foreclosures and mortgage backed securities need to stop calling those in foreclosure idiots who bought houses they could not afford. There might be some in that category that as stated above would lose their house if they can’t afford the new payments.
The current financial crisis has many distinct problems that this plan can address efficiently.
For instance, homeowners who don’t have upside mortgages will not lose equity in their homes due to foreclosure sales below market value. So even if you are not in foreclosure the foreclosures in your neighborhood will affect your property value. No one is untouched by this crisis.
Let’s assume you did everything right and are living within your means. Your job requires you to move to another state recently. The value of your house however has decreased over 30% which basically forces you to chose between losing your job or losing lots of money on the sale.
This plan would take care of the upside mortgage problem for anyone who submits a request. This includes all those borrowers who are upside down on their mortgage whether in foreclosure or not.
Wall Street will also benefit from this plan because all of those risky loans held as securities would be paid off to the investors. Right now, they don’t even know what, if any return they might get from these Securities.
Under the plan,the refinanced mortgages could then be re bundled at their true value and sold to investors. This will also solve the liquidity issue as the funds will continue to flow through each of the processes.
