Unique Solution To The Foreclosure Problem

The foreclosure crisis has been devastating. Families no longer able to afford mortgage payments are forced into bankruptcy, while banks find themselves with properties valued at less than the loan principal. Solutions proposed thus far have primarily focused on loan re-modification measures that only slightly relieve the financial burden for homeowners and frustrate lenders who are forced into less attractive loan terms. However, one solution not being discussed in congress may resolve the housing market slump while benefiting families and investors alike.

The reality for many homeowners is that they simply cannot make their mortgage payments; due to depreciating home prices, they are also unable to sell. Foreclosure sadly has long been the only way out. According to the Center for Responsible Lending, a home goes into foreclosure every 13 seconds. What if these same homeowners could somehow rent their current residence and thus avoid foreclosure altogether? An extremist approach would call on federal and state governments to buy properties nearing foreclosure and subsequently lease them out. A much better solution is to offer incentives to investors in order to transform distressed homes into attractive investment opportunities that will stimulate home sales, while simultaneously offering low rents to current residents – which can be appropriately called the Real Estate Investment Revitalization Program.

Although interest rates remain at historical lows, levels have been ineffective in promoting such a buy-lend approach. By additionally offering low-interest or even zero-interest secondary loans, however, REIRP would entice investors to take a buy-and-hold investment strategy since the risk of further depreciation would be...

... middle of paper ...

...timately contributed to enormous price depreciation in the hardest hit areas when the housing bubble burst.

The Real Estate Investment Revitalization Program offers a unique solution to the foreclosure problem currently being experienced in the United States. By bringing together investors and distressed homeowners in a mutually beneficial arrangement, REIRP resolves issues inherent in loan re-modification programs. Furthermore, it gives current homeowners the ability to sell their property, something the Deed for Lease program by Fannie Mae and other programs are unable to do. REIRP may not be the best solution for everyone, but the program would undoubtedly help many distressed homeowners avoid foreclosure while creating attractive investment opportunities that will help spur home sales – a positive outcome for families, investors and the entire housing market.