Mortgage Paradigm Change
The banking and mortgage system is designed for maximum profit at the expense of its clients. People get into financial trouble for various reasons such as medical costs and lost of livelihood. These unfortunate people often have their equity in their homes stolen from them through foreclosure.
I am in Belize facilitating the creation of a credit union based on a new paradigm. The main difference between it and conventional lending institutions is that there are no foreclosures! Instead the institution providing the funding becomes a partner and if the owner cannot make payments, the owner must move out and the institution takes on the responsibility of upkeep and renting of the house. Proceeds from rental leases go toward management, upkeep, and back payments. There are no steep penalties that kick the owners when they are down. When the owner has paid back the funds owed and has savings equal to six months of payments, the owner may move back into the home at the end of the current rental lease. Both the owner and the institution have to agree to a sale of the property.
This new system makes the loaning institution a partner that retains responsibility of the house. Therefore the institution should be more careful in not making loans based on inflated values of houses. The brokering of mortgages would slow since the obligations are passed to the new owners of the mortgages.
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