Millions of home owners want to move into a new home but can’t because they owe more on their home than it is worth. This has led to fewer buyers which has paralyzed the housing market, leading to fewer buyers and stagnating housing prices.
With this legislation, banks must allow mortgage holders to transfer their mortgages to a new home, with these stipulations: The duration, principle value and interest rate all remain the same. The value of the the new home is equal to or greater than the current home. Banks are paid a “loan transfer fee” equal to 1% of loan value. The program will have clearly defined boundaries and end-dates.
Since conditions of the new mortgage are as good or better for the bank, banks will not be allowed to jettison existing debtors which they deem “unfit”.