Most of the programs created to keep borrowers in their homes and avoid foreclosures are extremely complicated, long, and unclear because they imply a strict process of qualifying not only the borrower but the loan as well.
During the times of the real estate boom, sub-prime mortgages were offered to pretty much everyone, some people did not have to qualify according to conforming rules (no income proof was a big one), so why would they need to qualify now to keep their homes if the intention is to avoid foreclosures?
The 700 billion dollars used to bailout banks with the financial reform (recently estimated to approach the 5 trillion ) did not poor down to the majority of the population since they were given to the lenders without the condition of implementing common sense practices in exchange.
PROPOSAL: Give the home owners the chance to keep their homes and continue making their payments on a “reasonable” and automatic modification. The current process of qualifying homeowners before they can get the modification it’s not only absurd, but time and money consuming. We ask the lenders to provide automatic and reasonable loan modifications without having to qualify the borrowers, so that we avoid millions of foreclosures.
WHAT WE CONSIDER REASONABLE: For example, re-amortizing to 30 or 40 years and offering a 2% fixed interest rate for the first 5 years and after that a change to 6% fixed rate for the rest of the term of the loan (the other 25 or 35 years).
BENEFITS: Having automatic loan modification for every homeowner would keep people in their homes, making their payments (which reactivates the economy and the confidence in lending institutions to keep lending), it would give them back the sense of responsibility and importance of having a good rating, it would avoid the tons of foreclosures that damage the market, it would minimize fraud, it would save lenders and borrowers thousands in legal fees, it would avoid damages on the properties and vandalism, it would also stop the clogging of the judicial system, it would save time, paper, money, it would eliminate the work of people on loss and mitigation departments who are not really knowledgeable or qualified, it would minimize the wide discretion given to the lenders to authorize loan modifications under unclear and complicated criteria, it would turn the way we are going all around. The economic crisis derives from the real estate and mortgage crisis and ensuring we stop it on time will ensure the recovery of the country.