Ever since the recession we have we experienced a serious economic depression. People loosing jobs that they were going to retire from. A change of location and lifestyle has left thousands of families in America out in the cold. Due to financial hardships homes all over America are experiencing a foreclosure crisis.
In order to improve the situation, we must devise a plan that will benefit the mortgagee and the mortgagor. It is sad to see men and women that have worked so hard, their entire lives loose their jobs and homes. I have come up with a few plans I will be dealing with in this essay. But before I get into these ideas let us deal with what is going on now. The financial institutions are loosing money and they haven’t been working with the mortgagors to come up with a solution to benefit any of them. The mortgagees have been foreclosing the properties in order to satisfy the debt.
I want to elaborate further on this topic. To avoid future crisis in this area a clause can be put in the mortgage contract stating that if financial hardship come, they, which is the mortgagor can receive a six month grace period. That will enable them time to get another job. They can only receive this grace period every five to ten years. In order to prevent the mortgagee from loosing money they will receive the same payments, plus a certain amount of their income tax as well to catch up for the six months that they didn’t make payments. Let me give you a brief illustration. We have a mortgage contract in which it is agreed by both parties that the borrower will pay $1000 dollars a month for a $250,000 dollar home which is all inclusive.. It will take the borrower twenty years and ten months to fulfill this contract. If there is a clause that states that they are allowed to have the six month grace period they would owe $6,000 dollars plus the current charges. At income tax time they can pay $3,000 and then the other $3,000 when income tax season comes up again the second year. This way both parties are satisfied. The mortgagor keeps their home and the mortgagee still makes money. If the borrower doesn’t pay like it was agreed during income tax season then the contract is void. The mortgagee can then foreclose the property and find another borrower to secure the remaining debt.
Another plan I’ve come up with is this, with the six month grace period clause being in there is great. But another clause would have an option to refinance the mortgage contract if needed. I call this a “mercy clause”. Hardship can happen to anyone and the borrower may loose their job, but during the six month grace period they may get another one. Unfortunately they aren’t making enough money to survive paying the same note every month. The borrower can only qualify for the “mercy clause” if they have honored their mortgage contract for at least half of its term. I want to use the same illustration. You have $250,000 dollar home and the borrower was...