There's a fairly simple solution to the real estate crises: Declare 28-36 Debt-to-Income [DTI] Qualifications to underwrite mortgages in default which facilitate mark-to-market holdings for Financial Institutions. Those homeowners who cannot qualify for at least 75% of what they originally borrowed under 28-36 DTI, sign Deeds-in-lieu of Foreclosure for lease-purchase agreements with note holder(s) at fair market rent and purchase rights at market value (market value is based on others in market who can qualify under 28-36 DTI) today. Qualify the loans and the real estate market and values settle out while credit and trust are restored in mortgage backed securities producing financial market stabilization. The 25% write down is backed by the U.S. Government. This 25% is substantially less than the bail-outs to date. Banks and servicing agents are already in place to grasp the underwriting and non-performing loans become qualified so values are validated. This entire process could take 18-24 months but with immediate impact as this plan is less costly.
I may be the only one in the world who ever purchased his own mortgage at a deep discount and then sold the collateral for significant gain. I’ve learned one thing: He who controls the debt, controls the equity. We have to go back and underwrite what was not done the first time around. Simple. The accountability is back in the marketplace and credit markets restored.
