An innovative approach to the foreclosure crisis

In an Op-Ed column in Saturday’s Globe, Tufts professor Rachel Bratt proposed an interesting approach to our seemingly unshakable foreclosure crisis. Bratt begins by restating the obvious: there is “ample blame all around” for the crisis and none of the measure proposed thus far have worked.

What Bratt now suggests is that the 2008 Neighborhood Stabilization Program, which assisted municipalities in purchasing vacant and abandoned homes, be modified to allow non-profits to assume that role. Such involvement would consist of taking title to the property and then renting it back to the current homeowner, the very same person who lost the house to foreclosure. This approach would address the “moral hazard” concern of allowing borrowers to walk away from debts they knowingly took on - in this case, the borrower would actually lose ownership of the home and would not profit from any future appreciation. The benefit of this approach is that it would lend stability to neighborhoods and families and would ensure that local property taxes were paid and that buildings were kept in good repair.

While Bratt’s solution is not a simple one, nothing else has worked and the frequency of foreclosures continues to rise. It’s time for new and innovative approaches.