One of my personal finance heroes, and nationally syndicated talk show host, Dave Ramsey, has posted an alternative to the $700 Billion dollar bailout plan.
Click here to view
Dave has created a Common Sense Fix (PDF) for how to get out of the current crisis. Here’s one suggestion that really caught my attention –
B. In order for a company to accept the government-backed insurance, they must do two things:
1. Rewrite any mortgage that is more than three months delinquent to a 6% fixed-rate mortgage.
a. Roll all back payments with no late fees or legal costs into the balance. This brings homeowners current and allows them a chance to keep their homes.
b. Cancel all prepayment penalties to encourage refinancing or the sale of the property to pay off the bad loan. In the event of foreclosure or short sale, the borrower will not be held liable for any deficit balance. FHA does this now, and that encourages mortgage companies to go the extra mile while
working with the borrower-again limiting foreclosures and ruined lives.
What do you think? Is Dave on to something here?
Big thanks to Imelda for sending me the link to Dave’s plan.