Tuesday, July 12, 2016

Foreclosures and Student Debt

An idea I had when running for NJ State Assembly was to help graduates carrying college debt and help them purchase a foreclosed home. It would help or eliminate the student loan, generate tax revenue, reduce the glut of foreclosures, and help stabilize the prices of existing homes.

There is a problem with foreclosures in New Jersey, and a problem with students who are struggling to pay them off and purchase a home. Perhaps there is a way to resolve both situations and turn it into a positive for New Jersey. I would look at this as a win-win for the graduates and the housing foreclosure market.

As an example, if a foreclosed home that was worth $450000 is now valued at $200,000 and a college graduate has a debt of $100,000, perhaps combining the two into a $300,000 mortgage. Most banks would look at the student debt as an obligation against qualifying for a mortgage loan.

However, the student could only qualify for a foreclosed home, not a new home or typical mortgage. This would possibly help eliminate empty homes in foreclosure, help stabilize home prices and give a graduate the opportunity to own a home. By using this method, they would be able to pay down both loans at the same time.

By the time many students pay off their loan and qualify for a home, their kids would be going to college.

If the student defaults on the mortgage, it would not eliminate their student debt. Perhaps it could be set up where a percentage of the mortgage goes toward the principle of the student’s debt. Another possible option would be able to pay off the $100,000 student loan and carry a $300,000 mortgage.

If the college graduate can show some kind of collateral or promise of a job in a certain field...such as a doctor, a lawyer, engineer, etc . . . . a certain income level, it would be much better to have a family in the house than for it to stay empty in the foreclosure process.

They would not be entitled to any discounts or incentives, and would still have to meet the same requirements that any other home buyer would qualify under. There would be no student loan debt forgiveness.

I have heard that some banks are thinking of selling their foreclosures to investors who would rent them out. That would hurt neighborhoods substantially, as the investors really do not care about the neighborhoods and are only looking to receive a monthly income. Perhaps an idea like this would help prevent that from happening.

Countless foreclosed homes are being stripped of their copper pipes etc. while they sit empty, or taken over by those that do not belong there. Numerous homes are bought in NJ by investors, who live out of the state and then rented out, and as long as the rent is paid they investors don’t really care who lives in them. Perhaps this could be a win-win for everyone. Many banks do not want to keep the growing list of foreclosures and are thinking of selling them off to investors who have no interest in the neighborhood other than monetary gain.This may not be a perfect plan, but I haven’t seen any other solutions or ideas. This could be a starting point to help resolve the foreclosure and student debt issue. Moreover, perhaps an even bigger plus it would keep graduates from leaving the state and losing another valuable asset.

A tax ratable for the state!

This is what I call innovative thinking and perhaps putting New Jersey back on the map.
I realize one is a Federal loan and the other is a state loan, but there must be a way this can be worked out to benefit all.

Instead of taxing people to no end, let’s start thinking outside the box on bringing revenue into the state coffers.

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