One of my blog readers sent me this email.

If I could be President Obama’s Mortgage Czar, the first thing I would mandate is that all existing and future mortgages become assumable.

This would immediately make available financing for the real estate market–and might even be a way for banks to deal with some of those famously-toxic assets.

Implementation of this mandate would allow both the existing borrower and the lender to avoid the costs and damages of the foreclosure process–and would help protect neighborhoods from further decay and decline.

Under this plan, lenders would fare much better, most lenders now force homeowners to be in default with their mortgage before they will even consider a short sale or modification of the loan.

It just makes sense to get the mortgage debt transferred before it goes into default.

And with lack of liquidity in financial markets, it makes more sense than ever to transfer debt rather than forcing buyers to secure new financing–which may or may not be available.

This is not a new idea, not too long ago we were able to transfer our mortgage debt, but today assumable mortgages are very rare.

Your thoughts?

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