A solution to the housing and foreclosure crisis

By Chris S. Sander

This solution that would put an immediate halt to the rising foreclosure rates in this country.

A solution that I've been proposing for almost a year now, and it would work, and it would work in a dramatic fashion. Here's how you stop the foreclosures dead in their tracks, allow people to remain in their homes, and allow the banks to continue to make money, without having to write down losses or go into the real estate business.

First, you must understand that the banks that are servicing this paper, don't want to go into the real estate business and they don't really want to throw someone out of their home.

Second, most people didn't wake up one day and decide that they didn't want to make their house payment any longer. Most were forced into the situation when their rates adjusted.

Thirdly, lending conditions were dramatically different then what they are today, so the process must be streamlined.

So here's how you solve the problem:

1. Recast a new Note and Deed of Trust at the original rate of which the loan was taken. (This would only apply to rate / term refinancing and ARM's with negative amortization would be exempt)

2. Apply any past due payments, along with any fees, to the new loan amount and re-amortize the loan on a term that is most affordable for the borrower. (The loan must be a fixed rate loan)

3. Because the new loan is based upon making the payment affordable again, credit score, income, asset or property valuation is not needed or necessary.

By doing this, the servicer, A) receives monthly payments, which means profit. B) They don't have to go through the process of foreclosure. C) They don't have to sell a property in a declining market with virtually no way of obtaining a profit.

So how does the homeowner benefit? A) They get to keep their home. B) The monthly payments are now affordable again. C) They no longer have to neglect paying other obligations.

So how does the market benefit? A) Property values stabilize. B) Wall Street investors stop taking credit losses. C) More money back in circulation due to the restoration of liquidity.