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A Grand Strand Banker Proposes a New Foreclosure Plan

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By : Leticia Carvalho    99 or more times read
Developing a system of saving homes from foreclosures and spending the $700 billion-worth bank bailout are often discussed in Wall Street and Capitol Hill.

But seeing the foreclosure problems increasing in South Carolina, a mortgage banker who has been in service for long years steps up in coming up of solutions that would address these problems. This concerned banker is Michael Cantrell from Surfside Beach.

Cantrell proposes a Federal Housing Recovery Plan, which would keep distressed homeowners in their homes and make the housing market recover in less than two years.

This eight-page document states that the government would purchase the troubled mortgages at a discount of 6 cents in a dollar. The new loan amount would be determined by how much the property owner could afford to pay it per month. The difference of the original amount owed and the new amount the borrower would pay would become a securitized bond which would be sold at a more expensive discount to its face value. Borrowers are not going to pay interest for the bond but at maturity date, they should repay the government the bond principal, either by refinancing or by selling.

With this plan, it is expected that in 15 years time, or even less, the housing market would reach a point where their property value would be higher than their first- and second-mortgage liens. Their family income would rise, curing their credit and making them able to refinance.

The down sides? Selling the mortgage to the government at a discount is a great hit for the bank, while the homeowners are most likely to stay in their homes until they have paid off their debts.
Cantrellís proposal is not much supported by lawmakers, but one senator has recommended that he speak with the representatives of his state.

The approval of the proposal is still uncertain. Lawmakers must take time to analyze how it could solve foreclosure problems.
Leticia Carvalho has been educated in the finer points of the foreclosure market over 5 years.

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