Brought to you by the same people who cause the problems in the housing market in the first place:
1) Be less strict when approving credit/mortgages.
This is just stupid. The problems in the housing market can be traced back to the Fed and government agencies making it easy for people with bad credit to get a home loan. The riskier the loan, the more likely it is that the borrower will default on the loan and that the banks will have to foreclose on the house. It was because of bad home loans that banks got bailed out in 2007-2008 as it is.
Oh, yeah, let’s do that again. Why not, when the taxpayers will foot the losses again?
2) Banks (or government entities) should make bridge loans to unemployed homeowners.
Let’s see. People are defaulting on their home loans because they can’t afford to pay them back. The solution is…more loans and more debt! BRILLIANT!!!
3) “Earned principal reduction”
Basically, the bank reduces the principal balance every time a payment is made (shouldn’t they be doing this anyway). Homeowners who make payments for 3 years would only be required to pay back 95% of what they owe.
Wow. A whole 5%. That’ll solve the problem.
The kicker is that, if the price of the house increases, the homeowner would have to share part of the increase with the lender. In other words, if the value of your house went up, you would automatically owe more to the bank.
These are all great ideas…if you are a bank. If you owe on your home, you would likely end up paying more.