I believe the US economy could use a boost especially if it didn't cost that much in taxpayer dollars. I have some ideas and the closest I found in
a thread after searching was a thread discussing something Obama was considering only for government held mortgages.
Anyway my ideas to boost our economy:
Banks with your existing mortgage to provide refinancing to those in good standing and/or good to excellent credit refinancing at special rates at 2
percent for 5 year, or 7 or 15 year terms, 2.75 for 30 year terms.
For everyone else who has paid their existing mortgage on time for at least the last 4 months and without any other existing mortgage issues, provide
refinancing at existing rates and terms by just refinancing using something I call a rollover loan. Their house loan may be underwater meaning they
owe more than their house is valued at or their credit may not otherwise be considered good enough. They already have an existing loan and if they
have been paying on time, let them rollover into the same loan amount plus refinance costs but at existing rates.
Pros I see: A really big economic boost for the US economy. I would be willing to refinance my remaining loan with 7 years left to a 2 percent 5
year loan. I'd either pay off my loan faster and/or pay less each month. So would just about every other homeowner who has been paying on time.
Existing laws, regulations, bank restrictions, new special laws might be needed to allow such a program
I believe the Fed loans to banks at very low rates or next to nothing, refinancing at a 2 percent loan would cut into bank profit.
Banks would still collect refinance costs by homeowners paying immediately or adding it to the loan.
Letting everyone who's paying on time refinance at existing rates might require legislation because it might violate all the other bank requirements
about who can refinance. This would not change how much people owe on underwater loans but it would boost their finances years sooner than the banks
would typically allow. They could build up equity much faster.
Banks and the government body in charge of federal loans might have less profit or they might argue decreased revenue or increasing losses by having
existing customers pay less. However if banks were so successful doing refinancings in the past with the fees they collect doing so, why can't they
do so again? They might need to skip the requirement for house appraisals and rollover the loans giving the best to customers with good or excellent
standing the 2 percent rate.
How much would it cost our government? Maybe nothing except special legislation to enact it. Well the federal agency already facing losses from
federally financed loans might have decreased revenue. Someone would need to estimate that cost for taxpayers. We want banks to stay solvent too.
Would reducing their profit on existing loans make them insolvent? If the Fed is providing funds at next to nothing, I think they could take it.
After all, taxpayers were on the hook for billions of dollars in tarp funds. Banks should be required to do their part to help the economy. Besides
if the program is successful, GDP and economic activity and all kinds of regular bank loans will increase dramatically.
We could keep the program in effect for 12 months.
What do you think?
edit on 29/9/11 by orionthehunter because: (no reason given)
edit on 29/9/11 by orionthehunter because: (no