A Solution to the Nation’s Mortgage Crisis

As our nation went into a financial tailspin in late 2006 and mushroomed in 2007 fueled by the real estate collapse, the first reaction was the problem would correct itself as was the case in subsequent years. Even in 2011 people are still searching for solutions.

Like most problems, it seemed very innocent at the time and as the nation headed into the 2008 national Presidential election fingers were pointed in many directions. It was the mortgage brokers fault. It was the homeowners fault. It was Wall Street’s fault. It was corporate greed. It was your fault.

Whoever was at fault, most adhered to typical solutions not realizing the financial collapse fueled by the housing crisis needed a non-traditional solution, since most had never been a part of the financial calamity our nation was experiencing, let alone living through a similar environment, called the Great Depression of 1931.

Near the end of 2007 and announced in early 2008, The Mortgage Holiday was being discussed in various circles. Thought of as a fluke, even though the proposal was basic many simply shrugged off the notion Congress would not adopt due to political partisanship or Lenders/Servicers would not approve. About the time of the bank bailout spearheaded by Treasury Secretary Hank Paulson, several economists put a figure that each household be provided $25,000 to aid in stimulating the economy. While experts and public policy makers never communicated the economic despair our country was headed, the banks and large financial institutions were in fact provided an emergency tax-funded bailout. Unfortunately it never trickled down to local businesses or consumers as projected, thus the financial crisis took on legendary definitions as people, communities, neighborhoods, towns and cities became decimated and even now in 2011 people are still looking for viable solutions or solid strategies to recover and rebuild their lives.

The Mortgage Holiday is simple. It provides benefits for a much larger population than any traditional initiative. It can be used for Homeowners as well as Renters, however one of the biggest features is it is voluntary, so for those who feel they do not wish to participate, they do not have to. It is not a government hand-out but simply allows participants a “time-out” for up to one year on mortgage/rent payments. No one loses as even though no payment would be received by your lender/servicer/landlord, they would be made whole by using part of the stimulus proceeds that have already been approved by Congress but have yet to be tapped.

So, rather than waiting on someone to give you something, the spirit of The Mortgage Holiday would allow you to become empowered and use the funds based on your own discretion, based on how much your normal payments would be. As an example, if your mortgage/rent payment is $1,000 per month, what could you do with $12,000? Surely, you wouldn’t need others to stimulate the economy. You would do so yourself by paying off bills, purchasing a new vehicle, doing home remodeling, adding to your savings, etc. and in doing so the economy would be stimulated.

Why hasn’t this proposal been adopted? President Obama knows about. Many in Congress know about it. That will be covered in the next segment.