The essence of the WI-FUR plan is to attach a housing “voucher” to each unemployment check that could be directly applied to a mortgage payment.
The U.S. Treasury, according to top Fed officials, is beginning to concentrate very closely on the effect of unemployment on the housing crisis and foreclosures. There is increasing concern that the foreclosure problem cannot be addressed without providing financial assistance to unemployed homeowners.
Proposals to prevent foreclosures by attaching government housing vouchers to unemployment checks is gaining traction among officials. Recent discussions for relief plans have been along the lines of a foreclosure relief plan proposed by three Wisconsin School of Business real estate professors earlier this year. Read recent USA Today coverage here.
“The Wisconsin Foreclose and Unemployment Relief Plan” (WI-FUR), was developed in the Graaskamp Center for Real Estate by Professors Morris A. Davis, Stephen Malpezzi and François Ortalo-Magné. WI-FUR calls for the rapid expansion of two established programs—unemployment insurance and housing vouchers—to prevent a wave of foreclosures among recently unemployed workers.
“In a nutshell, the WI-FUR plan gives unemployed people a housing voucher to enable them to make their mortgage payment,” says Davis. “It doesn’t require any mortgage modification and it’s temporary in nature. You receive a voucher when you are unemployed and then when you are employed, you stop receiving a voucher.”
Davis says the other foreclosure proposals currently being debated, including the “Making Home Affordable” plan put forward earlier by the Obama Administration, have focused on mortgage modifications—to take a person who has a bad or ill-suited subprime mortgage and convert it to a more appropriate 30- year, fixed rate mortgage.
“Those plans really do to nothing to help the unemployed who have completely sensible mortgages but simply can’t afford to make payments on them,” says Davis. “Our plan is the only plan that we know of, outside of one by the Boston Fed, that helps people make mortgage payments while they are unemployed.”
The essence of the WI-FUR plan is to attach a housing “voucher” to each unemployment check that could be directly applied to a mortgage payment. The amount of the voucher would be based on the Fair Market Rent, which is already computed for each county by the U.S. Department of Housing and Urban Development.
The cost of the WI-FUR plan has been calculated by the faculty members, but would depend on parameters set by policymakers in terms of size of the voucher, number of people eligible, and the length of time an individual could receive the vouchers.
“Right now the U.S. is experiencing the greatest housing crisis in its history since the Great Depression, “ Davis says. “As members of one of the top real estate programs in the country, we felt it was our responsibility to come up with a potential solution for this housing crisis and that’s why we developed a foreclosure relief plan.”
Read details on WI-FUR here