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Wednesday, September 2, 2009

The Foreclosure Crisis

James Surowiecki outlines several alternatives to dealing with the foreclosure crisis except one: the Shared Appreciation Mortgage (Not Home Yet, New Yorker, August 10/17, 2009: 25). Instead of throwing money at people or at mortgage servicers, the government should enter into sharing the cost of the mortgage with the distressed homeowner. Homeowners pay what they can, the government picks up the rest. When the house is eventually sold, homeowner and government share the proceeds in proportion to their contributions.

It is simple, there is no need to involve mortgage servicers and the mortgage is not written down.

The only risk is that the price of the house will remain under water; but in such cases the sharing could continue with the next owner.

Sent to New Yorker

1 comment:

CoachingByPeter said...

Every investor must start-up a plan before heading up on buying a property. Learning the basics of real estate is essential rather than visualizing the money aspect. Listen to skilled professionals like bankers, estate agents, home inspectors, etc., they most likely know the latest trend.