Every now and then, something comes along when I think to myself: Gosh (well, I would probably use a stronger word, but you get the drift), why didn’t I think of that??? I mean, I would have loved to have been the one to invent, say, the airplane, or television (maybe not television) or soft served ice cream, or an iPhone with a battery that could be replaced. But, sadly, I wasn’t. As the title of this article suggests (okay, says) I am about to tell you about a GREAT rescue plan for homeowners facing foreclosure. It is freaking (sorry for my language thoughts) awesome. It is simple. It is direct. It would probably work. And, I am afraid, it is also another one of those things I would have loved to have come up with. I didn’t.
This proposed plan comes via New York Times business columnist Joe Nocera. And, he, too, no doubt wishes he came up with this plan. He didn’t. He is quoting from a dude named Daniel Alpert, who the Times describes as “a founding partner of Westwood Capital, a small investment bank.” He is someone the Times has apparently turned to a number of times in the past for expert quotes.
Of this plan, says Nocera, “…a proposal came across my desk that I believe is so smart, and so sensible, that I hope our nation’s policy makers will give it a serious look.”
Okay already. What’s this great plan????
The plan is, a law would be passed that “encourages homeowners with impaired mortgages to forfeit the deed to their lenders but allows them to stay in the homes for five years, paying prevailing market rent,” says the Times article. In turn, says the article, quoting from the plan, “the lender would be forced to accept the deed, and the rent. After five years, the homeowner-turned renter would have the right to buy the home back, at fair market value, from the lender.”
The article goes on to talk about why this plan would be so good for the homeowner, the bank and the country.
Most important, it would create a sort of “time out” for five years during which homeowners would presumably get their financial cards in order, banks would be in better shape, and the global fiscal crisis upon us would have long been a distant and very bad memory.
As we have been saying here for some time, the Times article raises the key question: Now that we have “saved” Wall Street, isn’t it time to “save” Main Street?
The current mega bank bailout using all of our money only helps distressed homeowners indirectly, and, even that is questionable. So far, banks show little to no sign of coughing up more mortgage money and rates on fixed rate mortgages have gone up and not down in recent days. Doesn’t sound like a rescue plan for Main Street to me!
I agree with Joe Nocera that this proposed plan is far better than anything John McCain or Barack Obama or President Bush (well, okay, we can discount him right away) or the Congress has thus far come up with.
It makes sense. It would probably work. It is fair to all sides. And, sadly, that is why it probably doesn’t have a chance to be put into action.
Photo Credit: david.nikonvscanon