A Loan Broker Has a Brilliant Plan for Stopping Foreclosures
A loan broker of Fontana has disclosed a plan to stop foreclosures – a plan that sounds brilliant. It may be that Joseph Gonzalez holds the key to the solving of the nation’s foreclosure related housing problem that has been assaulting house owners, realtors, banks and the builders daily. Gonzalez is nto touting his plan to get personal laurels. He is the owner of Ram Properties and describes himself as someone who is “for the people.”
His plan is very simple and if enforced it would halt 80% of the foreclosures that are creating havoc on the national economy. He said that the trouble is “nobody in FHA knows what to do.” The Federal Housing Administration is an offshoot of HUD and has been trying to come to grips with the foreclosure related problems. Gonzalez added, “Nobody knows how to stop the problem.”
He suggests refinancing the house owners who have gone underwater – value of the house is less than the loan amount, into 60 year mortgages issued by the FHA. The latter body will be the direct lender and also act as the mortgage insurer of the government, a role that it is already playing.
An example will make his scheme easier to understand. Suppose a house owner in the Inland Empire purchased a house for $400,000 with a sub-prime loan. The current value of the house has dropped to $300,000 and the house owner is being choked with paying for an unrealistic mortgage of which $390,000 still remains due. In such a situation that FHA could step in after getting the green signal from HUD to act as a lender.
This new lending division of HUD would then proceed to negotiate with the original lender of the loan and pay off $300,000. By this the lender or the bank accepts a tough loss of $90,000. But, Gonzalez adds, the bank should not groan and moan about it as it would have had to cash out $73,000 at least to go through the hassle of repossession, rehabilitation, depreciation and then resale following the tiresome process of foreclosure.
The house owner would possess a FHA mortgage of $300,000 with the monthly payments fully amortized for a period of 60 years. This will cut down the monthly payments by half at least.
For the past few years Gonzalez has been talking about his plans with many in the housing industry and has sent a copy to the Federal Reserve.
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