Good news for some homeowners. JP Morgan / Chase announced today a self-imposed 90 moratorium on foreclosures. Executives said that they want to give the government time to implement their stimulus package, and they want to allow themselves enough time to properly act on the changes.
So here is my government stimulus package idea (since everyone has one). What if we paid off every owner occupied mortgage in the country? Simply paid them off. You live there, you have a mortgage, now you don’t. Add a rule that says you cannot borrow more than 25% of the value of that property for 5 years (so people did not go too crazy with there new found windfall). It would stop the foreclosure mess in it’s tracks. OK, it’s not a perfect plan, I can see flaws with it, but there will never be a perfect plan, and it would definitely stimulate the economy. It would also loosen up the credit crunch. Many will argue that it does not help the poor. Sure it does. As soon as money begins flowing again, we all win. Businesses will begin to thrive again. Jobs will be created because those businesses will need employees. And I like that it rewards people who were financially savvy enough to own real estate in the first place. As for investment property or a second home, modify all mortgages to an affordable payment, but don’t lower the principal owed. That way, those investors will have to hold on to the property, and provide rentals for those that need them until prices return to more than is owed on the property. No more short sales.