A Solution to Foreclosure Crisis? Play Dominos … or Mortgage Musical Chairs
More than two million homes are expected to be foreclosed this year. What a waste. All because the owners can’t affort the particular payment on that house. Hmm. So what if we switched the people and the houses? Orchestrated a kind of mortgage musical chairs? Take Joe. Can’t afford his $600,000 house. But he could afford the payments on Jill’s $400,000 house, which she can’t afford. And she could afford the payments on the $250,000 house, which Andrea has been struggling to meet. So, sort of like with the domino transplant surgery on Grey’s Anatomy, Joe is switched to Jill’s house and Jill moves to Andrea’s. Obviously, the chain could be much longer. Yes, at the bottom of the scale, the person’s out of luck, and at the top the mortgage holder is, but the overall cost and pain might be greatly reduced. The banks would lose less money, housing prices would stabilize because more people stay in homes, and fewer people would have their credit ruined. Having so many houses threatened should actually make the process easier to pull off, and some kind of legislatively mandated incentives or assurances could help grease the skids. Might have to mandate that mortgages in such a chain can be assumed.
Part 2: Mortgage Sharing! Wait a minute, perhaps here’s another answer: You know that vacant house at the top? What about finding two or three would-be defaulters to share the house? They’d each get some equity, and together they could make the payments, keeping the pricey house off the market. Could also help save the folks displaced at the bottom of the chain. Pulling this off would be tricky, too. But in this era of computer matchmaking, you telling me out of millions of potential foreclosures, we couldn’t save hundreds of thousands of cases this way?