Third, do not allow mortgages to be sold for a substantial period of time - say, 10 years, 20 years or longer. Today's crisis was partly caused by a financial system that puts at risk companies that were too far from the investment and the borrower. If those who lend money could not get quick bonuses and then sell the bad loan to some sucker who has no idea who the borrower is or how sound the loan is, there would be an incentive to only make loans to sound borrowers without becoming too risk averse and freezing up the system.
We are a country firmly grounded in a strong middle and working class, but our current housing and financial crisis has put us in jeopardy. Homeownership is one of the foundations of our society. Responsible homeownership policies not only will help people stay in their homes and preserve our financial institutions but also can simultaneously increase homeownership and begin to change the trajectory from a negative to a positive direction. These three steps will move us even faster in the right direction.
