Any homeowner, including those who are current on their mortgage payment but unable to afford anything else, is invited to take advantage of the plan, which would allow consumers to have their current loans re-written as 30-, 40- or 50-year fixed-rate mortgages, depending on their circumstances.
Agawam, MA (Vocus) October 15, 2008
Senators Barack Obama and John McCain have each introduced new economic plans this week, but neither is comprehensive enough to save all homeowners facing imminent foreclosure, says Cambridge Credit Counseling President Christopher Viale. The focus of the candidates' proposals, mixtures of small business tax credits and penalty waivers for early 401(k) withdrawals, will certainly help millions of consumers, but they would do little to prevent the more than 20,000 foreclosures that are occurring nationwide each week.
Senator Obama has proposed a 90-day moratorium on foreclosures for those who are making "good faith efforts" to stay current on their mortgages, while Senator McCain suggests buying - at face value - the troubled mortgages of "deserving" homeowners, specifically, those who made a significant down payment at the time of their purchase. Unfortunately, Mr. Obama's three-month grace period would do little for the vast majority of distressed homeowners, who probably wouldn't be able to find additional financing in the current lending environment or save enough over the 90 days to prevent foreclosure. Mr. McCain's plan pointedly ignores homeowners who fell for zero-down mortgage offers, and, by buying mortgages at face value, would reward banks while exhausting at least half of the $700 billion dollars in the overall bailout package, a non-starter given the cost of the other proposals that will likely be included when all is said and done.
The shortcomings of these plans point to one of the dilemmas facing legislators as they attempt to create solutions to the ongoing foreclosure crisis: how to save homeowners who were victims of sub-prime loan offers without rewarding their bad decisions or the unscrupulous lenders who made such offers. To make a meaningful difference, the federal government must act decisively in a broad reaching initiative.
That's precisely what Viale has suggested in his recent Home Sweet Home proposal, which would provide direct relief to troubled homeowners. "The Home Sweet Home initiative does not exclude anyone from participating," notes Viale. "Any homeowner, including those who are current on their mortgage payment but unable to afford anything else, is invited to take advantage of the plan, which would allow consumers to have their current loans re-written as 30-, 40- or 50-year fixed-rate mortgages, depending on their circumstances." In exchange for the additional interest paid over the lifetime of the longer term, homeowners would be able to avoid foreclosure.
On Tuesday, Treasury Secretary Paulson remarked that, "Foreclosures not only hurt the families who lose their homes, they hurt neighborhoods, communities and our economy as a whole." Cambridge's Home Sweet Home proposal is designed to restore consumer confidence by stabilizing families and easing their financial burden. At the same time, the initiative strengthens communities and provides a viable solution to help move the sluggish economy forward.
"We're all breathing a sigh of relief after the volatility of last week's markets, but we still lack a plan to help homeowners - all homeowners," concludes Viale. "I hope that the candidates, the Treasury Secretary and others take the time to review our proposal and bring additional ideas to the table before things become much worse for homeowners."
ABOUT CAMBRIDGE CREDIT COUNSELING CORP.
Cambridge Credit Counseling Corp. is a professional debt counseling agency dedicated to educating young adults on the importance of sound financial management and providing financially distressed Americans with education and debt management services appropriate to their needs. For more information on this article or to schedule an interview, please call 413-821-6919.
You can visit Cambridge Credit Counseling Corp. online at http://www.cambridgecredit.org. To learn more about Cambridge and the community, please visit http://www.youtube.com/CambridgeCredit or check out the Cambridge Credit Counseling Corp. financial literacy blog at http://www.cambridgecredit.blogspot.com.
Cambridge Credit Counseling Corp.
cviale @ cambridgecredit.org