*Here’s an idea* for a compromise between banks run afoul of their own poor lending practices and homeowners turned upside-down on their mortgages.

Say the Jones are about to default on their mortgage. They don’t. Instead, the bank takes ownership of the property and becomes the Jones’ landlord. The result is a pretty standard lessor/lessee relationship.

  • The Jones’ rent would be capped at (pause to roll dice) 55 per cent of their mortgage payment– compartively, quite affordable.
  • The bank would refund their paid principal, less first/last/damage deposit (the way most mortgages are set up, there usually would not be much principal to give back).
  • The Jones could walk away at any time with (pause to roll dice) three months’ notice.
  • The bank would not be able to cancel the lease unless the Jones failed to pay their rent (or any of the other standard protections offered to landlords).

So the Jones keep a familiar roof over their head, are spared the expense and stress of moving, and receive a somewhat smaller black mark on their financial record (which they could eliminate with (roll dice) two years of on-time rent payment.

The bank gets a money-making property complete with renter and ongoing income rather than a write-off, legal fees, and lost accounts receivable.

Sounds like a win-win scenario, doesn’t it? Am I missing anything?