5 Ways To Restore The Mortgage Market

With the mortgage industry struggling mightily here are 5 creative ways to fixing the mortgage market. Shared Appreciation a few banks offered this mortgage in the 1970s, but the Internal Revenue Service never clarified whether the payments to outside investors could be view as tax-deductibles interest, which left homebuyers nervous. The way it works a homeowner agrees to share the profit on the home if he sales at a profit. This idea is popular in Australia. Hedge with a short sale the homeowner would short a regional index of home prices. The bank would hold the futures position in escrow; it could reduce its risk of losing money. If the homeowner had to sell, he’d make enough on the short sale to cover the decline in value of his home. Offer Puts the homeowner would buy insurance against a decline in regional home prices. Vary duration, not monthly payments keep payments fixed, translate a higher interest rate into a longer mortgage term. Treasury inflation-protected mortgages these mortgages would have monthly payments that creep up slowly even in times of fast-rising interest rates. This is very similar to TIP bonds. Some states prohibit these mortgages