FHFA's proposal to limit the initiative based on mortgage size, among other restrictions, needs to be rethought: It is precisely the bubble-driven, overinflated mortgages that are driving this problem and burying families in debt. If limits are needed, we should instead look at the more relevant figure: the current market value of the home. Doing so would allow us to target everyday homeowners who remain trapped by the fallout of a financial crisis they didn't create.
We must learn from the mistakes of the past and chart a bold new course. All underwater homeowners, regardless of mortgage size, should be able to access principal reduction, to bring their mortgages in line with the fair market value of their homes. Such a proven, commonsense solution would keep families in their homes, save taxpayers money and create real change in our economy—especially in low-income neighborhoods.
The CBO had it right: For millions of underwater homeowners to re-emerge above sea level, we need a fix that matches the breadth and depth of the critical situation we're in.
Commentary by Elyse Cherry, CEO of Boston Community Capital, a nonprofit community-development financial institution. She also serves on the Massachusetts Governor's Foreclosure Impact Task Force and has served on several boards, including Zipcar. She has also won several awards including the White House's "Champions of Change" and Boston Business Journal's "Power 50: Top 50 Most Influential Bostonians" awards in 2014 and Spirit Magazine's "Top 25 LGBT Power Players" in 2015.
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