I don’t get it. Just make it easier for people to pay back their loans rather than default?
If a renter can’t afford 2,000 a month for 15 years let him pay 1,800 for 30 years. Stretch it to 40 years.
As long as you have cash flow- you are buying time.
I’m no banker, but clearly there are some stupid mother F’ers making decisions.
Don’t give money to anyone. Re adjust the loans.
Everyone wins.
There is a point where buying becomes so demonstrably more costly than renting that you have to give up. That point is close to 30 years.
Mac, I doubt we can even imagine how many of these so-called mortgaged properties do not even exist.
Think of this whole scheme as a Jesse Jackson wet dream, race pimping bureacrats into giving up billions in mortage money inventing spin off investment products no one understood, and anyone accused of racism if they resisted or hesitated. Meanwhile make sure the top cats are connected cronies, massive political contributors ot both sides of the aisle, and richly rewarded for making sure the books were cooked.
Because the first loser is the owner.
If they default the bank gets the property and has the possibility of getting most of its exposure back - the owner loses his equity first, after all. Most of the defaults aren’t on the no-money-down loans.
This is not a simple analysis nor is your solution necessarily better for the bank.