Big Think
A forum where top experts explore the big ideas and core skills defining the 21st century Learn More
America Needs A RESCUE Mortgage Program
Kris Broughton on October 26, 2011, 1:06 PM
What we need is a RESCUE Mortgage program, a reduced equity, spoiled credit, unemployed/underemployed expectation loan that brings mortgage relief to those who cannot otherwise qualify for the refinance programs that are currently available. It's taken me two days to figure out why I had nothing to say about the enhanced Home Affordable Refinance Program (HARP) the White House announced this week. As much as I want to get in line behind other bloggers and applaud the president's efforts, it is hard to get excited about HARP when I know in the back of my mind that 11 million mortgages are underwater, 8 million mortgages are delinquent and 14 million people are out of work. For the delinquent and unemployed, HARP might as well be a fiddle
But instead of criticizing President Obama for doing all he can do, given the limited powers of the executive branch and an uncooperative Republican Party that controls the House of Representatives, I am going to lay out my RESCUE mortgage idea, one his administration can feel free to use as they see fit.
Making loans to people with reduced home equity who have stable jobs and good credit scores is easy. Making loans to people with reduced home equity who have spoiled credit is a challenge. Making loans to people with reduced home equity who have spoiled credit and are unemployed or underemployed is practically impossible. But many of these same borrowers, despite their circumstances, find ways to make some form of mortgage payment month after month. Many of them, who may be 30 or 60 days late on their mortgage have made these late payments—what we used to call "rolling lates" for the last two or three years. They don't have any savings left. Their retirement accounts, if they ever had any, are tapped out. Yet month after month, they are able to scrape together enough money to continue to have a place to call home.
If that's not the sign of a person who believes in the future of this country, I don't know what is. Which is why I call the RESCUE mortgage an "expectation" loan, because these beleaguered homeowners believe, as bad as the economy looks, that sooner or later it will get better. So why don't we bring these Americans to the front of the bailout line for a change? In a lot of ways, they are better risks than the mortgage banks who loaned them the money to buy the houses they are living in.
I know people of all income levels need relief, and I can appreciate the diligence of Senator Schumer to make sure, in a state like New York, that mortgages up to $729,000 are included in any mortgage relief plan. But the average mortgage in this country is right around $185,000.
Sign up for our weekly newsletter
About Resurgence
262 Posts since 2009
Resurgence combines news, research, and Kris Broughton's own life experiences as a politically aware African-American citizen to explore race and the politics of race. Drawing on Broughton's financial services background, the blog also delves into our ongoing banking crisis and the mortgage market meltdown—as well as the path toward recovery.
Links
Recent Posts
Original Page: http://bigthink.com/ideas/40832