Finally, A Commonsense Proposal in the Mortgage Foreclosure Crisis

For years before the housing bubble burst, the argument was that you could never lose by investing in -- or betting on -- real estate. That was the "logic" used not only by a segment of shady mortgage lenders but by the mainstream industry, and by every president in modern times -- all backed by publicly-guaranteed lenders like Fannie Mae and Freddie Mac.

For the past four years, we've faced the consequences of what turned out to be a false premise: millions of homeowners with homes under water; thousands who've already lost their homes; neighborhoods and whole communities scarred and sinking under the weight of abandonment and the lowering of property values that abandonment brings.

And for four years, community leaders, mayors and just plain folks have been calling for a commonsense solution that holds promise for individual homeowners, ravaged communities, and cities and towns alike: the write-down of the principle for underwater homes.

With this simple and somewhat elegant solution, principle and interest payments would be lowered, making payments not only reflective of real values but more importantly bringing them into line with what homeowners can afford. The benefits: homeowners could save their homes (into which most have already poured their life savings); neighbors' property values would end their free fall; communities would be safer; cities and towns would be spared the unnecessary (and ever more unaffordable) cost of extra policing, fire and demolition; and -- perhaps most important to the overall economy -- the housing market would stabilize.

Read the rest of the article at The Huffington Post