Q: I thought the letter from your reader that appeared in today’s California’s South Bay Daily Breeze entitled “Realtor Suggest New Angle For Loan Modification” was a brilliant, simple and fair solution to a home owner that is “stuck”.

The response that you gave regarding the present modification process in place is both ridiculous and an insult to all that have worked hard and paid full taxes on properties we have purchased over the years. I have never been “forgiven” for any debt I have ever acquired and do not want anyone else be “forgiven.” Don’t you believe this is not the way to either handle or solve the dilemma we are now in? Do you feel that what is being offered is a good solution?

The solution offered by the “Realtor” makes sense and gives the taxpayer a chance to recover the “give-a-way” that is taking place. It would also allow the government, financial institutions, and private investors a chance at making money from this disaster. With the method you described that is presently in place, forgiving debt is another source of getting “something for nothing.” This, by any society is neither appreciated nor beneficial.

What can the average person do to promote this course of action?

A: I’m a little confused by your response to the story.

The writer is a Realtor who bought her house at the height of the housing market bubble and it is now worth nearly $200,000 less than what she paid a few years ago.

She hasn’t qualified for a loan modification, but wonders why the bank couldn’t just issue her a new loan for the market value of her property, and then would receive any and all of the equity that builds up over the next few years. (Read the entire story: http://www.thinkglink.com/article/2010/08/13/new-hamp-rules-may-help-reduce-loan-principles#postcomments.)

The response I gave talked about the government’s Making Home Affordable (also known as HAMP) programs. They may be “ridiculous and an insult” to you but I didn’t invent the HAMP programs.

And while you have such a strong objection to loan forgiveness, the Realtor is in essence asking to have her mortgage forgiven. If she owes $450,000 and wants a new loan at $350,000, she is asking the bank to forgive $100,000. In exchange for that forgiveness (which needs to be written off by the lender and/or the investor), she is offering to give up any equity that is built going forward. In other words, if the property gains value between now and the time she sells it, she’s willing to give that to the bank.

The program I discussed is the government’s answer at the moment (but watch this space because this could change overnight) to the question of what to do with all of these loans that are underwater. All of the most promising solutions on the table now involve having the banks forgive debt.

And that’s what the Realtor proposed, anyway you cut it.

As for what I believe, I think that the government should be focusing on job creation because if we don’t get jobs for some of the 20 million people who are truly unemployed or underemployed, it’s going to be tough for the real estate market to improve at all from where it is right now.

(As I was writing this column, I got an email from a reader who received a pink slip today – just a couple of days before he is supposed to close on his refinance.)

If you want some action in Congress, you can write to your representatives. If you want to get HUD to take action, I’d drop a note to HUD Secretary Shaun Donovan at the Department of Housing and Urban Development, or pick up the phone. Here’s the contact information: U.S. Department of Housing and Urban Development, 451 7th Street S.W., Washington, DC 20410. Telephone: (202) 708-1112 TTY: (202) 708-1455

Personally, I think Washington, D.C. would do well to hear from more homeowners, home buyers and home sellers with ideas on how to solve the housing crisis.