There are many ideas floating around Washington DC these days, but will any of them help stop the foreclosure crisis? Everyone seems to have their own plan for helping homeowners through new legislation and banking rules. Here are just a few options we’ve heard:
Give The Government Complete Control Of Lending Institutions
Currently, banks are private and publicly owned entities, that are ruled primarily thought government organizations. In other words, private citizens own the banks, but the government makes the rules they have to follow. Much like any other business across the nation. This is a very general statement, but mostly true. The government obviously has a lot of experience with banking and mortgages, but should they be in control of it all?
Give Lenders Protection Against Lawsuits
One of the main reasons more lenders don’t provide remedies to foreclosure victims more often, is that they are afraid of being sued by the investors. Many people believe we should provide lenders with protection from being sued by their investors, which would allow them to restructure loans to make them more affordable when someone falls behind.
Start A Group To Research Foreclosure Problems (this one’s my favorite)
Isn’t that just like our government; they’ll spend a billion dollars to “start a group” to fix a problem, rather than actually fixing it. Anyway, some think a group needs to be formed with the nations leading financial experts (private experts who make $100’s of millions per year, rather than the people in public office who were already elected to do the same job) to review the nations foreclosure problems and eventually propose a solution.
Set Up A Bulk Auction System
This auction system would allow lenders to sell off foreclosure loans, in bulk, to other investors or lenders, who would restructure the loan to be more affordable for the foreclosure victim. Once the new loans are restructured, the government would insure the loan again, similar to an FHA or VA loan. The government would also be prepared to purchase the mortgages, in the event the bulk mortgages don’t sell at public auction.
Freeze Interest Rates On Sub Prime Loans For A Five Year Period
This would prevent all adjustable rate mortgages from increasing for a five year period. The idea here is to slow down the foreclosure rate while they come up with a plan to fix it permanently. This may also give property values enough time to recover and give homeowners a chance to refinance into a better loan.
These are just a few of the proposed solutions to help the victims of foreclosure and help prevent future foreclosures. Local and federal governments are scrambling frantically trying to come up with a new solutions, but in the meantime, take advantage of the existing government programs by contacting your lender and finding out if you qualify.