Skip Navigation Change.gov: The Obama-Biden Transition Team
 

Citizen's Briefing Book Component

LOGIN



FIND AN ISSUE YOU CARE ABOUT



MORE CATEGORIES

Content Starts Here

Idea Detail
130
Points

Mortgage reform

Financial institutions must take responsibility for their role in causing the financial crisis and must now take steps to keep people in their homes.  The government needs to take the lead in mortgage reform to put an end to deceptive lending practices. Banks cannot be trusted to regulate themselves.  In the interim, here are a few ideas:
Foreclosures:
1. Require financial institutions receiving bailout monies to renegotiate mortgage terms (fixed-rate only) of homeowners facing foreclosure.  
Afterall, many of these people shouldn't have been given a home loan in the first place!
2. Require lenders to rent foreclosed properties at a fair market rate until they can be sold. Consider renting certain properties to qualified applicants as a lease option to buy. This will help prevent further depreciation of home values and neighborhoods.

Mortgage reform: 
1. Income verification must be obtained by lenders to ensure potential homebuyers don’t spend more that 35%-40% of their income on their mortgage. 
2. Require lenders to provide all first-time homebuyers with a homebuyer education course when they apply for a home loan to ensure they understand the homebuying process and can afford their mortgage payments. 
3. Adjustable-rate mortgage contracts must disclose potential increases in mortgage payments to avoid surprises.

3 Comments  »  Posted by Janny Z to Economy on 1/13/2009 5:18 PM

Comments
 
cantordust
1/13/2009 5:52 PM
A homebuyer education course sounds like a great idea, but what goes into the course?  Do the lenders get to design the course?  Or are we going to require all first-time buyers to attend the courses now offered by FHA & hud?  Would failure to finish the course result in an inability to close on the house?  Will the buyers have to pass an exam to prove they understand the material in the course?  If they fail the first time, how many extra chances do they get? 

In general it sounds great, we should make sure that all home-buyers understand the legally binding documents they are signing, but the details of implementation could create additional problems. 
 
jwho
1/13/2009 5:57 PM
Foreclosures are killing our economy by reducing all property values in the area . Foreclosures by reducing property values reduces the amount of property tax paid to the city and state. They also cause the homeowner to loose everything they have invested and leave them homeless.
Lenders that have received bailout money need to renegotiate all mortgages held by them to 4% 30 year fixed mortgages. This would assist every homeowner by reducing their monthly mortgage payment at no cost to the taxpayer. The greedy lenders that caused this problem will just make 4% which is more than other businesses that have not received bailout funds backed by the taxpayer!   
 
mich
1/13/2009 6:17 PM

There are several issues with your suggestions:

  1. Having the lenders hold onto properties that they foreclosed upon would only exacerbate the problem of not enough capital. They need to sell these properties to get the money in order to help current homeowners with higher rates refinance into lower rates. They need capital in order to fund the new loans. Oh, but wait maybe they can get more money from the bailout and the tax payers (do you sense the sarcasm)
  2. There is no more Market for the stated loans so the lenders do not offer them
  3. There are 1st time homebuyer classes already offered
  4. Guess what … there is this document called and “adjustable rate rider” that everyone that takes an adjustable rate mortgage is required to sign  it even lists the maximum rate , when the rate will adjust, how often it will adjust, and what index the rate adjustment is tied to… the government just came out with it….(About 20 years ago) People just choose not to read what they are signing…. But let’s blame that on the lender’s  too.
  5. the reality is everyone wants to blame everyone but themselves....can we please stand up and take responsibility for something????
Subscribe to ideas