Mortgage Relief

Solution

   To prevent this, the federal government should consider paying the interest on troubled mortgages that apply for hardship as a temporary measure until the homeowner's financial situation recovers.

   For example, student loan programs allow payments to be deferred until the student graduates to make payments. If something similar was done for troubled mortgages, the financially distressed will be provided some relief while the lending institution would receive interest payments from the government to prevent the loan from defaulting.

   To prevent abuse, the federal program may be limited to pay up to five years of interest if the homeowner files for hardship. Five years should be long enough for the unemployed to find a job. Another restriction may be that the program only applies for primary residences (not multiple homes), and that a homeowner may only apply once during their lifetime.

   Monetary-wise, having the government pay the interest on a mortgage during a five-year period is far more cost-effective than inheriting the entire mortgage itself (as with Fannie Mae/Freddie Mac).