Reset all mortgages to a fixed rate. If a judge can stall mortgage interest resets, then a permanent reset to a fixed rate can be done. This should especially apply to subprime loans.
How did the crisis began? Good ole fashioned greed. As lenders ran out of traditional borrowers, they turned to subprime borrowers- who could be easily manipulated and had never owned a home. These borrowers (some who may have qualified for a fixed rate loan anyway) were then bamboozled by lenders with low interest rates at the outset of the loan period. After 2 years rates shot higher than the space shuttle. Lenders gave financial incentives to brokers who sold the higher loan.
When my mother refinanced her house after my father passed away, the broker did not show up to the closing and the company tried to give us a variable interest loan- after we had agreed to a fixed rate loan! My mother tore the papers to shreds and we walked out. Others were not as fortunate.
So with lenders engaging in such nefarious practices, its only fair that they shoulder this burden. In the end the bank needs to make a choice- do they foreclose on this property and risk turning it out on a sluggish market, or do they bite the bullet now, fix the rates and allow these borrowers the chance to stay in their homes.
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