One is to revamp the Home Affordable Modification Program (HAMP) to empower housing counselors to modify mortgages using a standard formula, rather than leaving this task to the banks.

Second, banks could be given an incentive to participate in HAMP by empowering bankruptcy judges to modify the principal on mortgages.

Third, experts say that making mediation programs a mandatory requirement will give banks an opportunity to meet with every distressed home owner, look through the papers, consider the nuances of the situation, and make a good-faith effort to work out an arrangement.

And fourth, right-to-rent programs could be expanded for foreclosed home owners — like the one operated by Fannie Mae, which lets home owners rent their homes at fair-market value for five years.

Source: Washington Post, Ezra Klein (10/15/10) 

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