Congress and Treasury Secretary Hank Paulson are working this weekend to hash out details of the proposed $700,000,000,000 bailout during this amazing time in American history. My brother-in-law is an adjuster for FEMA, spending months away from his home evaluating damaged property across the country. FEMA Mortgage could be created to essentially do the same thing.
Now that Uncle Sam will be buying bad mortgages, they could utilize FEMA mortgage adjusters to evaluate the borrowers current situation:
- Can they afford their mortgage payment?
- Is this a situation worth modifying their existing loan?
- Was income over-stated or not verified with the mortgage?
- Was the property purchased as owner occupied and it’s now an investment property?
- Are there signs of mortgage fraud?
Home owners in trouble who have financial ability to stay in their home, would have the opportunity to re-qualify at either a lower rate and/or reduced loan amount with a silent second that would be called due if the home owner sold the property within a certain period of time (similar to State bond programs). This would be available to home owners who were having difficulty due to an ARM adjusting or perhaps a financial set back that is now resolved (such as temporary loss of employment). Loan modifications with Uncle Sam owned mortgages would be streamlined, very low cost and legit.
Home owners who could not re-qualify based on their actual income, may have the opportunity to rent a property at a payment they can afford. Having property occupied as a rental is better than abandoned–for that home and for the neighborhood. Perhaps Uncle Sam will start FEMA Property Management…they can even re-use some of the trailers they bought for Huricane Katrina.
If fraud was used on a mortgage now owned by Uncle Sam, the FEMA Loan Adjuster would determine if it was caused by the borrower or loan originator and proper actions would be taken.
A plan such as this, could provide jobs for out of work Loan Originators (of course they would have to pass the National Licensing requirements) and employ Real Estate Agents, builders and contractors, too. FEMA Adjusters could also determine which foreclosed properties, owned by Uncle Sam, need repair before it can be resold at a higher value or if they should just be sold “as is”.