Mortgage Solution

A simple solution to the credit crisis is to allow the FHA to lend up to 110-115% of the value of a homeowners present appraised value. Place a provision in the loan that prevents the homeowner from refinancing their loan for 2 or 3 years without imposing a prepayment penalty. The main reason people today are unable to refinance is a lack of equity. The ones without equity will have equity in the future if they do not become serial re-financiers and maintain their payments and property condition. After the time period is up allow them to refinance at the usual loan to value limits which now is 95% for a rate and term FHA refinance. This program would not cost $700 billion dollars and would help homeowners.