From a story on KCRA.com.
"California consumer advocates are calling for a moratorium on home foreclosures.
They warn that the state is facing a tidal wave of foreclosures over the next year as more homeowners are hit with payment increases brought on by subprime loans and risky mortgages.
The executive director of the California Reinvestment Coalition told the Senate Banking, Finance and Insurance Committee that a six-month moratorium would give officials time "to figure out how to keep people in their homes."
The Mortgage Bankers Association estimates that more than 46,000 California homes were in foreclosure in March and more than 76,000 mortgage loans were seriously delinquent.
Subprime loans are made to borrowers with shaky credit histories or those who cannot always document their incomes."
This line of thinking really amazes me. I'm wondering just what in the world they think they can do to keep someone from getting foreclosed on. We're talking straight affordability here in the majority of cases. People can't afford their payments!!! How about a 40 year mortgage? 50 year? Lower the interest rate?
Let's see how that would change the payment on a loan:
We'll use a $500,000 mortgage with a 6.5% interest rate, amortized over 30 years.
P&I would be about $3,160 a month. We won't add taxes or insurance since that's a fixed cost and won't be affected by changing the terms of the loan.
40 year mortgage: $2,927 a month (savings of $233)
50 year mortgage: $2,818 a month (savings of $342)
30 yeat at 5.5% interest: $2,838 (savings of $322)
30 yeat at 4.5% interest: $2,533 (savings of $627)
One more weak attempt at keeping values inflated.