posted on Jul, 15 2012 @ 05:39 PM
I put this idea up on various threads but it never got discussed like it should have. What problems do you see from this idea? How do you make it
better? Do you think it can work? What will be the unexpected consequences of doing such a program? Idea below:
Piece-mealing the mortgage issue on a local basis is a start but it will take a national effort to make any headway toward fixing the mess. I have the
solution, but it carries the problem that investors will no longer be able to earn a profit on these mortgages. However, they will get their money
back they ahve invested. My belief is that MERS and the whole securitization process was outside the established law rendering all these mortgages
invalid, thus this is also the fairest solution.
Have the FHA(or something similar) buy every mortgage for every primary residential property in the country for the full amount of principal owed.
Then do automatic refinancing with zero underwriting standards. Principal is reduced on all mortgages relative to the amount of time until paid off at
the rate of one percent per year. Thus if you still have 15 years left you get a 15% principal reduction. 10 years, 10% and so on. You also get the
option or refinancing to a 30 year term where you get 30% principal reduction. Such a program would pay for itself. For example: I owe $300,000 on my
mortgage. FHA entity would pay the investors $300,000 and refinance the loan with me for 30 years with principal reduced to $210,000. Over the 30 year
period the FHA entity would get repaid $360,000 at 4%. This would easily cover their initial outlay plus the cost of servicing the loans and the
eventual defaults. Make the mortgage stay with the property so after resale the FHA entity still gets their money back. Some people still won't be
able to pay and they will lose their house. However, if you face losing your house, you still get the principal reduction and the buyers are forced to
accept the FHA refinance or buy out of it. Thus you have a shot at getting out with some cash in hand to start over. Remember, this costs taxpayers
This would save most American households a couple hundred bucks per month. It would allow many folks currently underwater a chance to move on if they
desired. It would immediately prop up the housing market as lower payments allow homeowners to spend more for the house. It would allow for more
savings and more spending which equals a better economy and more jobs. It would eliminate the courts proceedings and backlogs and get the banks out of
a serious legal issue.
Thereafter, have the social security fund make these loans and keep the banks and investors out of the primary mortgage business. They will still have
second homes and commerical properties to loan on, as these are business endeavors where the parties must look out for themsleves. Do banks and
investors really deserve to take a few hundred bucks a month from every homeowner in America? In my opinion they don't and our government needs to
ensure that they can't.
This is my answer. If you think it will work, forward it to someone who may be able to make it happen. Feel free to make changes as you see fit.