We need some changes in regulations for home mortgages.
By Daniel at 25 November, 2009, 10:13 am
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“Even recent bargain hunters have been hit: 11% of borrowers who took out mortgages in 2009 already owe more than their home’s value.”
There is absolutely no justifiable reason why this was allowed to occur. It is reprehensible that Fannie Mae, Freddie Mac and FHA continue to allow only 3.5 % down payment and monthly payments of 31 % of total household income. This from lack of Congressional oversight.
New laws are not needed for home mortgages. Just change in regulations.
20 % minimum down payment on any purchase
Monthly payments no more than 25 % of taxable income
Total Income verified and notarized.
No 2nd mortgage for down payment
No more than 80 % of buyer’s principal for a mortgage loan
No loan if receiving Low Income Energy Assistance Program (Leap) or Food Stamps
Eliminate adjustable rate mortgages
Eliminate interest only payments
Subsidies and tax benefits not figured in meeting above requirements
Banks should notify borrowers after a 30 day payment is missed that future payments will be subtracted from their accumulated principal and added back to mortgage value remaining. This would occur until such time as accumulated principal is either reduced to zero or 12 monthly payments missed. At that time foreclosure will be made. This gives a chance to those recently unemployed, but without savings, a chance to get a new job and continue the payments.
- Theodore Beckley
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