How to Solve the Foreclosure Crisis Essay
“Predatory Loans” must be defined as a first step in the process of determining which loans need to be modified and rewritten and those in which foreclosure proceedings should continue. Those that need to be modified or rewritten will be much greater than those in which foreclosures continue as scheduled.
I. Define “Predatory Loans” – Any 1 of the following:
1. Mortgage written with FICO score of less than 620
2. Mortgage written with false income levels, assets, etc.
3. Mortgage written with variable interests rates, interest only
4. Mortgage written with interest rates that exceed 7.50% anytime 5. Mortgage payment equals higher than 25.01% of your income at any time during mortgage. …show more content…
IV. 90-Day Moratorium on Foreclosures
Immediately (Current Mortgage-holders):
Recent separation from job (income) and is now drawing unemployment compensation benefits of any party on the mortgage. OR
Newly disabled for short-term or long-term reason. AND
Greater than 90 day delinquent. In the Future, After Restructure Process:
Previous conditions above, plus appropriate insurance are exhausted.
The fourth step: regulations on fees and the terms of underwritten mortgages, is the essential step to the solution of the foreclosure crisis. The U.S. must create a even playing field and stop entertaining to the most fortunate. Working class and the wealthy should be treated equally.
V. Regulations on Fees A. Cap on APR – 7.50%
Adjustable and excessively high interest rates causes mortgage holders to delay paying off the loan and can cause higher cases of defaults. This also inadvertently targets those who loose their job to no fault of their own or is injured. B. Cap on Late Fees
Cannot exceed 5% of monthly mortgage payment and cannot be added to back into the mortgage for interest to be paid on late fees.
VI. Regulations/Restructure on Loan