Three Steps To Homeowners Keep their Homes and Boost the Economy
Posted on November 24, 2008
Filed Under Foreclosures |
What you see with the stock market and with the crude oil prices is the result from the United States housing sector. Despite the government’s ability to keep the nation afloat, prices of homes are still declining at a fast rate with the amount of foreclosure rising each financial quarter.
Now the lawmakers in Washington are turning their attention to fix the problems that plague mortgages that are falling delinquent thanks to the shady lending practices in the sector. These plans look to adjust mortgages in delinquency so that both the borrowers and the lender are winners.
As good as the intentions of lawmakers are, many homeowners still will be unable to keep up with the mortgage payments. Why? Relationships between services, lenders, and investors are bruised to find a viable solution, making it impossible to restructure those mortgages that so badly need it.
However, some of the plans floating around exclude owners who have already vacated their property. Thus, foreclosure will not stop in these instances. There is no complete evidence that mortgage modification is working. It’s also thought that some of those modifications will go delinquent some time in the near future.
With a large number of homes going into foreclosure, it’s critical that someone manage those properties. With so many homes being foreclosed on, property values are falling faster than anyone can stop them, putting undue pressure on the economy and homeowners.
Any action to stop the freefall of housing prices requires serious action by governmental agencies.
There are three steps that can be taken to bring this real estate back into “working” order. They are:
First Step – Homeowner to Renter to Possible Homeowner
One step that can be taken is allowing the homeowner surrender their home’s deed to the investor, renting the home for a period of time. Once the period of time has passed, the renter will try to qualify for a new mortgage at rates that work for both investor and renter. If the renter fails to qualify, the home will go on the market.
What does this do? It keeps the family in the home while investors earn some money on the mortgage instead of them placing it on the market that’s failing.
Second Step – Home Becomes Rental Property
Once a default is noted, the investor owns the property. As property owner, they will look for renters who may like to buy the place after some time. That rent will go into the home as equity should the renter choose to buy the home. Most investors don’t want to become landlords but it keeps home from entering the soured market.
Step Three – Clearinghouses
Entities can be set up to take care of these foreclosed properties. These entities will then be responsible for regulating how and when properties are responsible. Using steps one and two make government agencies and lenders responsible for foreclosed homes. Step three uses the existing structure of government agencies to deal with the foreclosed property. Local governments can get help from the federal governments to help with situations much easier. Thus, being cheaper in the long run for the economy.
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