Last Tuesday we asked readers for input on what should be done about the foreclosure crisis. Here are some of the responses we received:
Reader:Banks should do lease purchases to get people into homes. Someday those people could get a mortgage to buy the home at a market rate with some of the lease payments refunded for down payment.
Reader:Lenders have been bailed out on a massive scale and should have worse credit than virtually anyone they are now scrutinizing. It seems they could pass through some of the generosity they themselves have been shown by the tax-paying public and realize that many would be able to stay in their homes if they could negotiate principal reductions that approximate the short sale price the lenders are willing to accept. Lenders would be able to avoid some Realtor commissions and closing costs, and could slow the downward spiral of home values that is swallowing more and more borrowers. Requiring borrowers to fall on their sword by going into default to get their lender on the phone is counter intuitive. Each one who decides default is their only option equals at least a short sale and at worst a foreclosure and another lost customer for at least two to eight years.
Terry Adkinson, partner, Adkvas Group:As a building designer and interior designer, I have had my own firm for over 27 years now. … Our company is barely surviving, and as of this writing may only last another couple of months. This is the worst economy we have seen in forty years.
First, all banks should be required to keep 50% of the homes that they have foreclosed upon as rentals. Hire a rental firm specializing in running them. Then, as the market improves, slowly start selling them off. The idea of dumping two million empty homes onto a market that has been decimated is unthinkable. …
Second, all banks and mortgage companies should pay into a fund that insures them against such an occurrence. … Is that not what PMI Insurance was for? Why no investigation of PMI insurance?
Third, the IRS should allow a yearly extra deduction of a percentage of the value of the homeowner’s mortgage to help homeowners keep their homes. It should be allowed only on one home, no vacation or rental properties. …
Fourth, … the IRS should allow no capital gains on profits for builders in a graduated system for five years. The first year 100% no capital gains tax, second year 80%, and so on. This would allow builders to take the chance on producing the homes that will be needed as soon as the economy recovers. …
Fifth, require that 50% of all mortgages generated by a bank or lender be retained within the lender or mortgage company…. This will lessen the chance of fraud and will make them think twice about risky loans.
Reader:The banks are going to have to restructure some loans, as obviously these prices were allowed to go out of sight, due to false values applied by Realtors and appraisers. I'm afraid the poor banks, who by the way hoard money while homeowners spend money and actually stimulate the economy, are going to just have to assume some of the loss. Blaming the government has no validity. The banksters who bundled all of the mortgages and sold them off globally in securities is what caused this whole mess in the first place. Financial institutions are not hurting; the folks who were trying to acquire the American dream are the ones who got the shaft.
Reader:If you can call all of the thousands upon thousands of homeowners spotlighted on 60 Minutes last Sunday deadbeats and you just want to kick them out of their homes ASAP so we can all get back to our comfortable notion of how things are supposed to work in this country, that's fine. Let the banks continue to use forged documents while you're at it, as that will speed up the process too. If we started to think about people and not profits, we might be able to come up with a solution. Freeze home prices. Restructure as many people's mortgages as possible, or even short share but forgive the debt. Foreclose on those you must, but give unemployed people work building temp housing for these people.