Presidential hopeful Barack Obama today proposed a foreclosure moratorium during a speech focused on the flagging U.S. economy.
Speaking in Toledo, Ohio, Obama unveiled his so-called “economic rescue plan for the middle class,” calling for a 90-day foreclosure ban to help struggling borrowers seek assistance before losing their homes.
If put into action, the measure would only apply to owner-occupied homes where the borrower was making “good faith efforts” (hmm…) to make their monthly mortgage payments.
The difference between his plan and others before it is that only banks and mortgage lenders receiving aid as part of the $700 billion bailout would need to agree to the moratorium, potentially making it a more viable, sweeping initiative.
But the idea is fairly straightforward; if you as a bank need to be bailed out, shouldn’t your borrowers receive the same benefit, at least temporarily, until steps can be taken to seek constructive alternatives?
The move was one of a number of proposals extended by Obama, including a move to lift penalties on retirement account withdrawals and provide tax credits for new job creation.
Back in December, one-time presidential hopeful Hillary Clinton proposed a sweeping foreclosure moratorium and interest rate freeze as the housing crisis took center stage.
Individual states and cities, such as Massachusetts and Philadelphia, have already imposed their own foreclosure moratoriums, and most recently, the state of New Jersey entertained the idea of charging mortgage lenders $2,000 for each completed foreclosure to help stem the epidemic.