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A Solution to Foreclosures

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An interesting and responsible approach to getting our economy on track.

An interesting and responsible approach to getting our economy on track.

Published in: Economy & Finance, Business
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  • 1. Solving the Foreclosure Crisis An interesting and responsible approach to strengthen our economy
  • 2. Solution Overview
    • No bailout
    • Encourages people to help themselves
    • Creates incentives that steer people in responsible directions
    • Promotes and rewards consumer education
    • Gives financial institutions, government, and consumers a role in the solution
  • 3. Help Borrowers Pending Foreclosure Today
    • Tax-free second job to help afford payments
      • Those in foreclosure process can get 1-year tax exemption for a second job to help them with payments
      • Foreclosure process stalled as long as they gain ground on what they owe
    • Must enroll in and pass financial education class made available for free through institution that approved the loan
    • Second job/enrollment in class qualifies borrower for term/rate adjustment through Fannie
      • Single parents qualify for second job exemption
  • 4. Help Borrowers Save for Proper Down-payment Today
    • Create 529-like tax-free account for people to save for down-payment
      • Must be for primary residence
      • Any amount put into account is tax free
      • Person contributing money toward account gets benefit
    • Start education campaign for bank customers
      • People who complete an approved financial education course receive better LTV or some other discount on home loan (like insurance discount for completing defensive driver course)
  • 5. Good for Banks
    • Helps to avoid foreclosure
    • Good PR in helping consumers
    • Education program can market more products to people
    • 529-mortgage account encourages home loans
  • 6. Good for Borrower
    • Emerges from the process smarter and empowered to make better decisions
    • Can take pride in the fact that they saved their home and did it through their own hard work
    • Avoids foreclosure, which sidesteps disruption of lifestyle
    • More likely to have sizeable down-payment
  • 7. Good for Government
    • Strengthens economy by encouraging people and banks to solve this problem
    • Uses tax incentives in a way that steers toward people responsible behavior
    • Helps the lowest income families the most
    • No bailout

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