A Solution to Foreclosures

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

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A Solution to Foreclosures

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

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