The National Foreclosure Issue

By dallasrealtor | February 24, 2009

Where is the help for the largest problem in housing today?  The stimulus plan primarily targets homebuyers, not the current homeowners.  Jack McCabe, housing analyst, believes the government should target banks with funds to reduce the loan principal amounts.  “We need to find an incentive for those homeowners to stay in their homes,” McCabe said. “Right now, the amount of money in the stimulus to help homeowners in foreclosure is really only a drop in the bucket of what’s needed.”  So, what is the solution to this problem?  Government money would be better spent on mortgage reductions.  “It is also vital to have primary homeowners maintain some of their equity stake,” McCabe said. “For example, if a house was bought for $400,000 three years ago, and the homeowner put down $40,000 — 10 percent — the current value may only be $200,000. If that is the case, the federal government should inject cash into the banks with the purpose of resetting the mortgage balance to $180,000, so the homeowner still has 10 percent equity. All mortgages should also be converted to 30-year fixed,” he said.

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