Solving the Mortgage Crisis-A Solution…

Solving the Mortgage Crisis

The Simple Answer is amend the DUE ON SALE CLAUSE!

The shortest distance between two points is a straight line. Actually, it’s a line segment connecting point A to point B. It can get more complex but for the purposes of SOLVING THE MORTGAGE CRISIS, their is simple answer.

PLEASE explain to your elected representatives that a surgical assault  that may help in solving the mortgage crisis is to amend the mandatory, “DUE ON SALE CLAUSE” which currently forces home sellers to either come up with funds to close or be forced by banks to short-sell their homes or even worse FORECLOSE.

Sellers, especially those relocating to a new job and must sell, would rather take a low interest rate loan, say 1%, secured/underwritten by the US government (similar to student loans) than sell short and have their credit recked. This low interest loan with installments payments over 10, 15, 20, or even 30 years, for the difference between what the home sells for and what is owed should be issued in exchange for credit score retention. Doing so would  increase the numbers of ready, willing and able buyers in the pool and would position these folks well to repurchase once they’ve relocated.

Currently, sellers are being forced by banks and to sell short. Folks with otherwise perfect credit scores who are willing to take on debt in lieu of sellinmg short are not given an option to do so until after being foreced through the short-sale process by mortgage holders. Our government, of the people, for the people, by the people in lieu of helping consumers has opted to supply banks cheap money when they could just as easily make those dollars available for qualified transactions. As jobs shift and sellers move by necessity to find new employment, they are being forced to sell short by banks who are unwilling to provide low cost loans for the difference between what is owed and what the home sells for—a loan that any seller, who is current on their mortgage, could apply for and simply sign at the closing in conjunction with a sale. 

In order for banks and sellers to avoid short sales and foreclosures PLEASE demand that elected official vote to amend DUE ON SALE and provide low interest loans government secured loans to sellers NOW.

If this “AMENDED” due on sale clause provision existed, banks wouldn’t need to write down loans but would instead issue low cost long-term loans secured by the government in conjunction with a closing.

Sellers would then be motivated to sell their homes for the highest possible price to reduce the amount of loan they’d have to carry after the closing.  Banks and the government would make money through the issuance of loans to those who are current on their mortgages and Sellers’ credit score and history wouldn’t be damaged which in-turn would allow them to turn around and purchase a new home and thereby accelerating the absorption rate.

Simple answers to complex questions are not always easy to find but in this case, the shortest distance is the straight line.