With the housing market still struggling in parts of the country, many policy makers and economists are struggling with ways to help homeowners and the housing market. Sen. Jeff Merkley, suggests that policy makers shouldn’t give up and has offered a new proposal to be released today.
He aims to help homeowners who have struggle to refinance because their mortgages are more than their current property values throughout many parts of the country, with very few areas seeing appreciation.
He wants the government to take a direct role. He proposes a new, but temporary trust: “Rebuilding American Homeownership Trust” to buy up mortgages from lenders.
Under a proposed three year period, the program would offer three kinds of loans to homeowners who were previously unable to refinance. A standard 30-year loan at a rate of 5%; a 15-year loan at 4%; and a loan for 95% of the home’s current value that would be combined with a “soft second” loan on the remainder of the mortgage that doesn’t require payments for five years.
Interest rates will more than likely be higher than market, and would provide source of funds for the cost of foreclosure that may occur. Previous programs have had minimal effect on homeowners, especially those who owe more than their property values. Sen. Jeff Merkley hopes that this program will provide an option to foreclosure which will help the housing recovery process.
Sen. Jeff Merkley suggests that the program be overseen by either the Federal Reserve, Federal Housing Administration (FHA), or Federal Home Loan Banks.
Sherwin L. Sucaldito, REALTOR®, GREEN, ABR, CRPM
@properties
The Institute of Luxury Home Marketing
Green REsource Council, GREEN
Accredited Buyer’s Representative , ABR
Certified Residential Property Manager, CRPM
Photo credit by Third Way.
