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I don't know why the solution to many of the mortgage problems wasn't to simply extend the term of the loan by some ridiculous amount. Take a 30 year mortgage and make it a 50 or 60 year mortgage. The payment goes down to something the owner (perhaps "resident" is a better word) can afford, the resident gets to stay in the house, the bank still gets regular payments, still gets interest, doesn't write off the loan, doesn't have the costs and losses of a foreclosure, there's not a glut of homes on the market, values stay reasonably stable, the resident still has a shot at building equity and might be able to pay the loan off sooner if their income increases... Seems simple to me.
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