An interesting thought

Via Megan McArdle – I’m not for this, but it would solve the problem.

My lunatic proposal for the day: why not make it easier to move homeowners out of homes they can’t afford? Set up a streamlined foreclosure proceeding where a current or mildly delinquent homeowner can simply give the house to the bank and walk away. Do this with two legal provisos:

1. No tax on the forgiven loan

2. No black mark on the credit record. The bank marks the loan as fully satisfied.

Of course, if we decide to actually “fix” the problem we should loosen immigration and get people actually in the vacant houses.

2 comments

  1. This makes sense in a business sense but there are problems

    Give your house away and then what? Move in with your relatives?

    Banks would just own tons of homes and sell them super cheap, making the value of all homes next to nothing.

    This sounds like the Hyundai “if you lose your job you can return the car” … great on paper, but the reality is the rich (nope..the fiscally smart) owning tons of now worthless cars and the poor riding the bus and hoping not to see their old car drivinf by with a new owner.

  2. I think the Hyundai thing would not go on your credit, and you wouldn’t take the loss. You’re out the car either way, but you’re in a better position than if they didn’t have the program.

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