An open letter from a responsible homeowner- Home Swap program

Recent legislation is seeking to lower the principal of some mortgage holders, and this would be one of the greatest travesties in America if it happened. This rewards irresponsible home buyers for making uninformed decisions while punishing responsible homeowners in many different ways. As a responsible citizen and homeowner, these are some of injustices that have been fraught upon me.

1. I got a smaller home in a lesser school district than I should’ve been able to afford. Irresponsible individuals knowingly bought homes they couldn’t afford driving the market higher, and I had to settle in a neighborhood that fit my budget.

2. The housing and credit markets have tanked causing my 401K to crash by over 30% of its value.

3. My home value has decreased due to the failure of the home market, and I can’t move to a newer house because I can’t sell it and I will be indebted.

4. I will now have to pay via taxes to subsidize the bailout of irresponsible people so that they can keep a nicer home than I have.

That is ridiculous, and I believe that I have a solution that can reward those who were responsible home buyers while allowing those in mortgage trouble to leave their homes without a foreclosure or bankruptcy on their record. It is what I call the home-swap program. It would work like this.

1. A database would be compiled of city, state, incomes, current mortgage terms, etc for buyers who:
a. Are currently in trouble with their mortgages
b. Are currently in their homes with no late payments who have the income to afford a larger home.

2. Full documentation will be required.

3. A new federal entity would match people who have with unaffordable mortgages with those who have the ability to afford more. Since there are many, many people in trouble, there would be pools of homes in both the move up and move down category. There doesn’t have to be a 1:1 pairing, but the pool does need to balance.

4. The move up / move down criteria could be set up based on percent of income

5. Those up for foreclosure who choose not to move would be foreclosed in 6 months. Those who choose not to enter the program at all would be foreclosed under normal terms.

6. If we find that there aren’t enough people to move up, then the subsidy (lowered principal) should go to the responsible homeowners who have not missed a payment.

7. Houses would be sold “as is”. If a mover damages the property before departing, the damages would be paid via check garnishment.

Doing this would solve many of the issues we are faced with including:

1. It would meet approval from the overall taxpayer since we are now rewarding the responsible homeowners.

2. Home values would stabilize as those moving up would likely not move frequently and would be able to comfortably pay the promissory note or sell. It would also keep occupancy high in the lower end of the home range meaning that some of the excess capacity could be filled.

3. It would allow consumer spending to increase thus jolting the economy. Since people will feel comfortable in making their home payments, they will be able to buy items within their means.

4. Credit markets would open up as many of those who were saddled with high debt ratios are now lower with their new home / mortgage payments.