In your plan you say give the holder $2500 dollars to vacate , then sell the house at market Prices.
That idea doesn’t make sense to me.
Why not just write off the present mortgage, have the house appraised and let the present occupant buy it again at market price, if he can make the payments?
Well, if you’re presuming that the people who qualify aren’t paying, the occupant won’t qualify for a new loan.
What you’re referring to would be a plan to simply reduce the balance to current market value. Which, again, could probably work better than what they have been doing, except that it would invalidate an existing contract if forced by the government. However, designing some sort of tax or write-off benefit for the lenders in question (and the true investors and securitized owners behind the loan, that’s the harder part of the equation) would make it a bit easier of a sell.
If you "buy something" with NO $$$ down.then you have NO equity..you're a renter...and you'll bail again at the first problem..
Sounds good, however, many are not paying because they can't and/or won't. Why pay when you can live rent free for up to 5 years (2 to 3 being the norm). Some are out of work - awful situation, and some just are taking advantage of the system. Hard to distinguish who is who- which it is better just pay them to go.
Another thing. In banking, the accounting rules absolutely punish a bank who cuts a deal with any borrower - residential or commercial. If you cut the rate on a paying loan or eat some principal; if it is in distress, you have to call it a “troubled debt restructure” (TDR). Many regulators (and all the investment community) think these are akin to “non accruing” or “non performing” loans (”NPAs”). Banks loathe NPA’s - so if they do the right thing and cut a deal, they get saddled with a TDR which equals a NPA (in most places).
Why bother. Get it off the balance sheet. If another bank does the same loan fresh at the lower debt level, it is a perfectly OK performing loan. The government wants the banks to work with people then punish them when they do. It is crazyland out there.