Three Strikes Out Housing Plan

[redstate_democrat]

I'm not an economist, but I think a "Three Strikes Out" plan in the housing sector would have prevented a lot of this.

What this plan could have done is have an institution, sort of like a Fannie or Freddie, that is only concerned about restructuring loans and helping folks stay in their houses. Homeowners would get three chances to stay in their homes before being foreclosed on by having restructured deals, backed by the Feds, loan deferments if necessary, and community trusts set up for each congressional district in America to deal with short term problems with homeowners who are having trouble keeping up with mortgages. Have the funds borrowed from the trust placed in an instrument that is attached to the title of the house, a lien so to speak, and have that instrument start to be repayable at the end of the person's current mortgage. The funding for this trust could come from like a $1 tax on each person's mortgage payment and a $1 tax from the companies on each mortgage payment they collect. The fund could be self-sustaining and earn interest and the fees on the projected loans. The homeowners would only get 3 chances to keep their homes if they ever get in trouble. I think this is better than ruthlessly foreclosing on people's homes, driving down home values causing people to not be able to upgrade on their homes by selling and buying bigger, leaving whole neighborhoods devastated, causing credit freezes which results in a lack of liquidity in the credit markets which then have a domino effect on the rest of the economy.

That's MY plan. Is it even feasible?

[sandnsea]

1. The problem with the current HOPE plan

Which I think is changing.

You had to miss your mortgage payments, but not any other payments. So if you did like a normal person, and pay your mortgage and skip a credit card, you weren't eligible for the help.

That's why people were paying their credit cards and not their mortgages, which all the economists expressed shock over. The HOPE plan forced people to do that.

However, before you can apply for the HOPE plan, you have to work with your current lender - and if it's Countrywide or one of them, they will STILL try to sell you a no-interest adjustable loan.

There's a new program starting in October. I don't know how it'll work.

They need a program that is just simple. Anybody with over 6.5% interest, or who has lost more than 10% value in their home, gets a new mortgage, no questions asked.

[redstate_democrat]

4. We have an institutional problem. It seems as though common sense has left the building.

[zeemike]

2. Not feasible because...

That plan would only help the poor and there is no interest in doing that unfortunately.

[redstate_democrat]

3. You would think that these people understand it's not

"trickle down", but "trickle UP". :shrug: