With close to 25% of all mortgages underwater in the US, can owners reduce their principle on their home loan?
Reducing home owners principle would immediately stimulate the economy more than waiting for banks to decide what to do with the 7 billion or more that they were given in bail out money.
Guidelines: The home must be the owners primary residence. Only 1 home per family. The home was purchased between 8 and 2.5 years ago since 8 years ago is approximately the time period that reflects a homes value today.
Why should banks be required to lower the principle value of a home? Because it was their investment practices in mortgage default swaps and the easing of guidelines to borrowers that caused inflated home values. Banks were giving loans to anyone who could sign a mortgage contract whether they had a steady job or not. That practice drove the demand for housing and the price of housing soared. It was the investment practices of banks that caused the housing bubble not the home buyer.
Can we provide some security for home owners?
We need people in their homes not in foreclosure.