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My housing proposal:
- The government does not interfere with the lawful foreclosure process.
- If the former owner wants to remain in the house, the government buys the house during the foreclosure sale period from the bank at the lower of fair market value or the remaining mortgage balance.
- The government rents the house to the former owner at a fair market rent.
- After 2 years the house is offered for sale and the former owner/renter has the right of first refusal to buy it.
While this requires a lot of direct government involvement and expense, and while there is room for dishonesty at many levels, it is far superior to any of the proposed plans regarding public purpose, including:
- Keeping people in their homes via affordable rents
- Not interfering with existing contract law for mortgage contracts
- Minimizing government disruption of outcomes for mortgage backed securities holders
- Minimizing the moral hazard issue
- foreclosure was allowed to function normally
- renting at fair market rent is not a subsidy
- repurchasing option at market price is not a subsidy