Something must be done. “Over one million people lost their home in 2008,” according to Chris Palmeri of BusinessWeek, an increase of 63% compared with the year before (Palmeri). Likewise, in February of 2009 alone, around 87,000 homes were foreclosed (Christie). Something must be done to help those who have realized the fear of losing their homes, as well as those who may soon follow, and I have the solution. While pondering the foreclosure crisis, I came up with three main objectives that my plan must meet. First of all, I wanted to help the homeowner stay in his or her home, as well as to keep additional homes from being placed on the market due to foreclosure and further depress an already weak home market. Moreover, I hoped to provide a safety net for the lender, thereby reducing the risk associated with these challenged borrowers, protecting the balance sheets of the lenders who service these homeowners, and ultimately increasing the stability of our nation’s financial system. Finally, it was my goal to make the solution as cost efficient as possible for the federal government, so as to minimize the financial burdens on it and thereby the nation’s taxpayers.The eligibility requirements for my plan include anyone who has had a reduction in total family income, as calculated on their federal tax return (i.e. line 22 on IRS form 1040), of more than ten percent compared to their 2007 total income. My reasoning for choosing this percentage is that I felt that a reduction any less than ten percent would allow the homeowner enough income to continue their original payments. However, in harsh economic times, I realize that a reduction of ten percent or more in family income can severely affect families. In addition, eligibility c…
…lso, any past-due payments would be moved to the end of their payment plan, thereby taking that financial burden off of the homeowner until their financial situation improves and the housing market has a chance to stabilize. In addition, to appease the lenders, the plan promises that the government will guarantee all deferred payments to the lender, as well as make any income associated with deferred interest tax-free. Lastly, for the government’s benefit, the plan does not require the government to make any immediate payments to the lender, but merely gives support to the lender through their guarantee. Through my plan, I hope to provide for the needs of all in these harsh times, and keep millions more from losing their homes. I hope to help homeowners everywhere to come out of this recession stable, and with as little damage to them and their families as possible.
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