Mortgage Relief

Solution

   To prevent this, new legislation should be considered for the government to pay the interest on troubled mortgages as a temporary measure until the homeowner's financial situation recovers.

   For example, student loans are deferred until the student graduates before making payments on the loan. If something similar was done for troubled mortgages, the financially distressed will be provided some relief while the lending institution would receive interest payments preventing the loan from default.

   To prevent abuse, the program may be limited to pay up to five years if the homeowner files for hardship since that should be long enough for the unemployed to find a job. Further restrictions 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).