Secondly, this will create a floor on the housing prices. That floor will be established by market rent, which is the correct way to establish value.

This also shifts responsibility to the lender as opposed to the taxpayer to work out a solution, and gives them more time to do so, without forcing major losses. If they want to incur the losses, they can do so by eviciton, or they can come up with a plan to stave off the losses.

It is impossible to identify one entity that is “at fault” for where we are currently. The fault lies with the federal government for forcing lenders to make bad loans to stimulate home ownership, the lenders for not correctly identifying how much risk they were assuming for making the bad loans, the borrowers for taking bad loans that they couldn’t afford even on first payment, the realtors for encouraging people to buy homes that they obviously couldn’t afford, the mortgage brokers that arranged for loans to people without concern of whether or not they could pay, etc., etc., etc.

None of that really matters at this point. The golden rule applies. The lenders had the gold and made the rules. They still have the gold and make the rules. Rule #1 right now is that they are going to hold onto the gold. Period. No amount of pushing and prodding by the government or anyone else is going to change that. The only thing, in my opinion that will get things moving again is to establish a bottom to prices (which a market rent analysis does) and giving the lenders the time needed to re-assess risk. All that they can focus on at this point is losses.

I’m all for the lenders figuring this out and this allows them the opportunity to do so. If you think they’re going to stop lending in perpetuity, your crazy. They like money and they make a lot when they make good lending decisions.

I hate govenrment intervention altogether. It stops the free market from operating correctly, but in this case, I fell that this bill would put things on track to get things moving again

I am all for the market to settle this – but if the alternative is giving our tax dollars to those overpaid blood suckers at the big banks, you can forget it.

I would rather give the money to my neighbor anytime.

Home prices are not “crashing”. They are coming back to earth, where they belong. You can’t MAKE people pay more for a home than they can afford, and now that people aren’t certain that they can sell an unaffordable home for a profit, they are only willing to buy an AFFORDABLE home. There you have it. It’s that simple. Home prices will fall until people can afford them again. No amount of government intervention or social programs will change that. All that government intervention will do is put us further in debt, and make our recovery much longer and harder than it has to be.

Look at it this way – our economy was booming because everyone was selling real estate and/or using their home equity to buy consumer goods. But home expenses were so high that no one had any true “earned” discretionary income left over to puchase goods or invest in businesses – so when the housing market died our entire economy died.

If we modify these mortgages and/or rent payments so that these people can just barely afford their home payments again, then there’s still no discretionary income left over for anyone to purchase goods & services or invest in businesses.

BUT, if all these people who have “unaffordable” mortgages just let the house be foreclosed on and rented a more affordable home, they would find that they have hundreds, if not thousands, of extra dollars each month. In other words, they still have a roof over their head, they still have a place to live, they still have somewhere that their family can be safe, but they have enough money to go out to eat once in a while. Or buy a bike for their kid. Or buy a new washer & dryer. You get the idea.

So, if we allow the housing market to fall back to normal affordable levels, our economy will start to pick up again, and we’re on the road to recovery. But, if we continue to insist that housing prices “must stay high”, keep paying far too much on house payments, and finance all those high prices at the expense of the U.S. taxpayer, then we’re merely dooming ourselves to a long protracted recession.

A second problem: in any areas where
current mortgage payments are substantially above rents it creates the
following incentives:
1. a borrower can start a mortgage, default, and get the lower rent – if there is no down payment, this could be a
significant incentive to game the system
2. because of 1.) no one in their right mind would loan money for purchasing a house – either housing prices rapidly fall to be consistent with rents, or no loans get made OR the gov makes all the loans and takes the hit…

Incedently the prisons are more occupied than the churches. That IS reality.

The banker would fore-close the house.
Have the owner thrown out. They prefer that the house get wrecked, get dilapidated by the day, and make it a ground for crime and unsocial activities, than anything close to what you suggest.

All we need to do is open our eyes and look out and find out which one is true?

I didn’t jump into the feeding frenzy. I saw the signs that the house market was behaving irrationally. I wait to buy, anticipating the pop and reversion to a sane, reasonable, and affordable price. Allowing the overextended masses to remain in homes that they can’t afford keeps the market artificially inflated and it keeps me out of a home.

By your definition, I don’t own a home. Therefore, I’m homeless, equivalent to those folks who have already lost a home that was purchased at an unaffordable price with sleight-of-hand financing at best, fraud at worst. What’s your proposal to get me into a home at a price where I’m not overextended?

Or, is not owning or being able to afford a house the the penalty I pay for being observant and actually reasoning that the housing shenanigans were and are completely absurd.

I agree with the comment above that banks won’t want to lend as much if they think that you may foreclose and they’ll have to pick up the bill, but really ask yourself won’t that restrict lending to those who actual can afford it? Making things more stringent thus doing good for home values for first time buyers and those who save up and want to actually pay off their mortgage. If the pool of qualified buyers shrinks than home prices need to go down to reflect.

The temporary fix I guess at this point is that if banks can charge rent on these people than these people might actually pay rather than try and live rent free for a year before they get evicted from the place. Too many people have gotten to the point of feeling hopelessly stuck they just gave up paying their mortgages and to see no one getting kicked out of their homes they think why would they be the ones to get kicked out. They can’t be the unlucky ones.

I am all for sound resolutions that solve the crisis without creating too much unequal equity to those that favor while those who didn’t do anything shouldn’t get punished. I just don’t know how acceptable banks are about this nor homeowners. Because as surprising as it is there are a lot of homeowners who just don’t want to sell their homes thinking their house wasn’t affected by price depreciations. And this is what is causing the slow return to real home prices.

It will prevent good loans in the future, and excuse bad behavior of buyers and lenders and investors of the past.

The real fix is to allow the foreclosure and the buyer loses the house and huge debt, rents for a few years, THEN buys the same home at the correct price. Speed up the price drops and we will be out of this mess because the dirty little secret is that banks are looking for excuses not to loan because they KNOW the prices are still dropping. The want to wait until we hit bottom to start lending so their loan portfolios look good.

Give master sercivers (the ones making the calls on modifications or short sales) immunity from liability for good faith decisions from the investors in the MBS pools they represent. Banks (master servicers) want to drop prices but they are scared of the investors suing them, so prices are not dropping fast enough. Once we are at the bottom the lending will re-start and the economy will be in a position to recover. The trip down is where the problem lies.

Congress needs to stop being ignorant and wake up to the fact that they need to “benefit” people and not necessarily “please” them. Foreclosure sucks, but being saddled with hundreds of thousands of extra debt sucks more, and most of these loans should have never been done.

It is sure better than what we are doing now, which is using our tax dollars to incentivize the banks to let the foreclosures happen – they get reimbursed for their losses, end up owning 1/3 of all the homes in America, and never lose a dime of their 100’s of billions of ill-gotten pay, bonuses and sweetheart stock option deals – putting the economy in the toilet while they walk away with our money.

This is better than anything I have heard, as it addresses most of the issues surrounding the crisis for the working-folk: foreclosure and eviction.

Screw the banks, let them pick up the repair costs out of the billions in fees they charged to make these bad loans – then there will be work for unemployed construction workers.