This letter to the Times has a great suggestion on how to deal with foreclosures- end banks' automatic-eviction policy for families whose homes have been foreclosed upon.
This would have a number of benefits. It keeps property values up in the neighborhood by not having a bunch of vacant, boarded up houses. It keeps squatters (and the crime they sometimes bring with them) out. It minimizes the disruption for families (particularly kids) who might otherwise have to move, change schools etc. It also has the political benefit of making it less critical for the government to bail out folks who can't pay their giant mortgages by removing the cry that "these families will lose their homes."
Freddie and Fannie have already gone this route, and it seems like something that the Treasury could build into any future TARP payments to the banks that hold mortgages. Banks might complain that they need the houses empty to facilitate resale, but a.) nobody's buying these things now anyway; and 2.) anyone buying a foreclosed home at an auction is going to get a serious discount, and consequently will probably overlook the fact that the previous owner's stuff is still in the house.
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