I'm not in negative equity as I've owned my home for quite some time. However, I'm very sympathetic to those who are and it seems that a solution must be found that helps them without costing everyone else the earth.
Perhaps this is a naive suggestion but I'd be interested in the views of others:
Let Banks reduce the value of a mortage for a customer who proves that they require it. The reduction is agreed by both parties and the owner begins to pay the lower rate, allowing them to have a life again.
The bank retains the 'knocked down' amount on it's own books as equity or capital UNTIL the owner sells the house or dies and hands it on to their estate.
At that point: If the house realizes more, then the bank takes this and deal with the entry on their books. The customer has the option of paying off the mortgage that would have been due to sustain the 'achieved value', if that works out best for them ie from the proceeds of the sale.
This would avoid the bank having to deal with all the negative equity right away and spread the difficulty out over time, softening the blow as property prices recover.
Just a thought.
Perhaps this is a naive suggestion but I'd be interested in the views of others:
Let Banks reduce the value of a mortage for a customer who proves that they require it. The reduction is agreed by both parties and the owner begins to pay the lower rate, allowing them to have a life again.
The bank retains the 'knocked down' amount on it's own books as equity or capital UNTIL the owner sells the house or dies and hands it on to their estate.
At that point: If the house realizes more, then the bank takes this and deal with the entry on their books. The customer has the option of paying off the mortgage that would have been due to sustain the 'achieved value', if that works out best for them ie from the proceeds of the sale.
This would avoid the bank having to deal with all the negative equity right away and spread the difficulty out over time, softening the blow as property prices recover.
Just a thought.