Now that the government has decided to bail out all those financial institutions, it seems only fair that it should also offer a bailout to all of their customers who are behind on their mortgage payments. Any institution benefiting from the government bailout should be required to negotiate with its customers who are currently in danger of having their homes foreclosed.
First of all, the government should mandate that that these institutions convert all variable rate mortgages to fixed market rates. That alone would allow many homeowners to stay in their homes. The institution would just have to eat the cost of this conversion, which would be based the current market price of the property – which is likely to have decreased. Any portion of the old principal balance which exceeds this price would be added to the end of the new mortgage in months to pay.
For example, let's say someone still owed $220,000 on a property whose market price is now $200,000. Since what they owe is 10% more than the market price, 10% more mortgage payments would be added to the end of the mortgage. Therefore, their mortgage would take 33 years to pay off, not 30 years. If the borrower wanted to pay off the mortgage early or sell the property before the mortgage was paid off, the extra three years' worth of payments would be due in the form of a lump sum at that time.
Of course, some homeowners would still have trouble making their payments even after this kind of rate conversion. Lenders who benefit from the government bailout should be forced to offer these people mortgages on houses that they can afford. In this case, the lender would get the borrower's current home and the borrower would be offered a mortgage on a less expensive home that would be within their means. This means test would be done the old-fashioned way.
Now, any of these borrowers who had back-due payments on their original homes would still be obligated to pay up. The amount that they were behind would be rolled up and added to the cost of their new home as additional payments beyond the normal 30 years, as I outlined above for anyone whose mortgage on their current home exceed its current market price.
I believe this would be a fair way for the government to deal with homeowners who are delinquent on their payments to corporate beneficiaries of the bailout. It would give them an opportunity to keep their homes, while not actually letting them off the hook for anything or giving them a handout – which would be unfair to everyone else.
Terry Mitchell is a software engineer, freelance writer, amateur political analyst, and blogger from Virginia, USA. He posts a least one article a day to his blog - http://commenterry.blogs.com - on subjects such as current events, politics, technology, society and culture, religion, health and well-being, self improvement, personal finance, trivia, and sports. His commentaries offer a unique point of view that is not often found in mainstream media. His articles here on SearchWarp represent only a small portion of his work. All of it can be found on his blog. If you like his articles, you'll love his blog.
The government should suspend all Income taxes..Businesses could recoup their losses. home owners could pay their mortgages, and the rest of us could spend a lot of money , thus stimulating the economy..It's too easy and simple for all those pork bellies in Washington to grasp though... Mary Jane
Hey guys we don't make enough to pay income taxes, we get what little we pay in back except for Social Security and this concept Terry good Idea. I submitted mine quite awhile back to them all and even Lou Dobbs which is along similar lines with a twist. It was laid out again in one of my recent articles along with Usury. You know that thing in the Bible God is adamant about. Too logical for them and this is not about people my friend. It is all about money. Best Wishes.
Disclaimer: All information on this site is provided for informational purposes only! By no means is any
information presented herein intended to substitute for the advice provided to you by any health care or other professional
or organization.
