The economy needs a 1-2 punch to fix it.

First punch, we have to get Americans back to work by stimulating the economy. See http://www.stimulate-us-now.org to do that. It would take $700 billion from the pool of unspent TARP funds ($328 billion), the current stimulus plan ($590 billion uncommitted and unspent), and $800 billion bailout funds that are sitting idly at banks waiting for the next crises, and put it directly into consumer spending, which drives 70% of our economy. Every American 18 and older would get a $3000 prepaid credit card which must be spent in 6-months, because the card would otherwise expire. Consumer spending creates jobs, jobs create consumer spending, and both generate tax revenues.

Once we stabilize the economy and get millions of Americans working again, we do the second punch and implement Dan’s plan. Give Americans a chance to even pay a mortgage with the SUN Plan, and then find a way to make their payments meet their budgets.

I guarantee that this would work!

Dr. Jack A. Scott
Small Business Owner, Cavs Season Ticket Holder and Concerned American Citizen
http://www.stimulate-us-now.org

There are two types of problem subprime loans, Adjustable Rate Loans and Payment Option Arm Loans (POA’s). The adjustable loans predominantly have 1 and 2 year adjustment periods. Many of these payments have already adjusted up or will shortly. POA’s allow the homeowner to select from 4 monthly payment options.

80% of the homeowners with POA’s are currently making artificially low monthly payments, opting to add principal to the remaining balance each month (Commonly known as negative amortization). This provides them with the most affordable monthly payment.

The POA’s are programmed to adjust dramatically at the end of a five year period. The majority of these POA loans are due to adjust in about 2 years.

There are three obstacles hindering these homeowners from refinancing out of their sub-prime loans. 1) Lack of income to qualify. 2) Current property values. 3) Their lenders inability to help them. Lenders are in a quandary when it comes to restructuring loans for homeowners. In many cases they lack the necessary expertise and/or ability to handle the volume. For most homeowners it’s hit or miss as to whether their lender will allow them to restructure their loan or allow the homeowner to do a short sale enabling them to sell the property.

When hit with an overwhelming dilemma, one in the likes of which you’ve never experienced before, may require you to re-think the problem and force you to approach it from a different perspective. Perhaps from a direction you’re not accustomed to.

To help homeowners remain in their homes I suggest a three step course of action.

First have Congress enact a federally sponsored Mortgage Credit Certificate (MCC). Similar to the program New Hampshire Housing Finance Authority developed twenty years ago for first time home buyers.

It could work as follows: Each homeowner would get a $6000 annual tax credit which could be used to offset $500/month of mortgage payments. This would enable the homeowner to qualify for a standard mortgage as long as the MCC was granted for at least 3 years. $500/ month equates to over $83,000 more in a loan a borrower would qualify for at an interest rate of 6%. Borrowers would have the option of lowering their withholding on their w4 forms and receive the additional income in their paychecks each pay period. Homeowners would use this to help offset their monthly mortgage payments or receive a lump sum come April 15th. It should last for five years. This will enable homeowners to become acclimated to the mortgage payments. First three years $6,000. $4,000 the forth and $2,000 the fifth and final year. The cost of the five year period would be $24,000. The total cost over 5 years to help save 5 million families from foreclose would be $100 billion.

Second: Most of the mortgages on these homes are upside down. (Homeowners owe more than the homes are worth). Currently FHA will allow a homeowner to refinance up to 97.75% of a homes value. Why couldn’t FHA expand the FHA Secure program and finance up to 125% of the homes value and charge a higher mortgage insurance premium (MIP). Even if the federal government paid to ensure the entire risk, it would still be cheaper than buying loans back after they become a foreclosure as the government is planning.

These first two steps should be enough assistance for many of these homeowners to refinance out of their sub-prime loans.

Third: If needed the homeowner’s current sub-prime lenders would now be in an enhanced position enabling them to reduce the balance of the sub-prime loan down to 125% of the homes current value making it possible for the homeowners to complete a refinance.(example: current sub-prime loan balance $300,000 current home value $200,000, 125% of current value =$250,000. New loan would be $250,000, sub-prime lender would write off $50,000)

Homeowners would regain control by knowing up front the necessary steps involved in which to re-finance rather than having to wait for an over burdened hit and miss loan mortgage servicer who may or may not approve the restructuring of their current loan. Homeowners get to stay in their homes and the tax payers would make out much better on their current investment of $700,000,000,000 (700 billion).

If the loans have shorter than a 5-year time-frame, then they are by law extended to 5-years.

Privately issued loans can receive financial compensation for loss of income, clearly less expensive then the ignorance of the current Hank Paulson’s et. al. plans. Also, immediately bringing money to solve our financial crisis from the “bottom up”, instead of having the criminals bail out themselves, leaving all of us the bill to pay going forward.

This itself, this one mandate lawfully implemented will stop, right now, “STOP” all this nonsense we are all going through.

You will immediately hear a giant sigh of relief from the entire United States citizenry.

An excellent financial aid formula can be calculated to give the same financial benefits to renters, and because landlords would be given the 1% interest rate, they too can be part of the financial incentive given to renters.

For example; a renter is paying $1,500 per month for their home needs, the financial aid would be at least $750 per month direct to the renter.

This is so easy to implement, the “red tape” of all the individual circumstances is eliminated immediately.

Within 90 days this would be in full force throughout the United States. Our computerized county records throughout the United States, complete, and exact as to who is the owner(s), and the loan holder(s) on each property.

Our nations’ ability to again support our infrastructure needs will immediately begin. The local stores, restaurants, sports, and entertainment industry will be again robust. All this will lead to jobs, jobs, and then even more jobs.

We then can focus our attention to the removal of “The Money Masters”, The Federal Reserve itself, specifically, Alan Greenspan is indeed a fool exposed, as a complete “tool” of the corrupt system, and of course the elimination of the IRS.

Then, as a nation, we can debate, and vote on any, and all political ideas. Within a free, Republican form of Government.

When asked what form of Goverment we have, most automatically answer a “Democracy”, then asked to say the Pledge of Alligence to the Flag, they recite; “I pledge alligence to the Flag, of the United States of America, and to the REPUBLIC (!) , for which it stands, one nation under God, with liberty, and justice for all.”

This a great nation we have, moments from now, we can accept the criminals solutions, or we can discard the criminals, arrest them, subject them to lawful trials, and render judgement peacefully.

I for one choose PEACE. I support Ron Paul because he supports my beliefs in the good of our nation, supported by the Constitution in place.

She never intended to be behind in her payments, and in fact is a very brilliant skilled escrow officer with over 32 years in the business.

She first however, because of this severe economic downturn, “crisis”, lost her car, all her credit priveledges, and her small Palm Springs condo, because she no longer could afford any of them.

This very loving, hard working, college graduate, was thus next to be forclosed upon. This is not someone who bought 5 homes, etc.

Take the time to google “The Money Masters” to gain insight into this entire financial crisis, as it is man-made on purpose.

On October 17th, 2008, just over 2 weeks later, news arrived contained in a Federal Express overnight letter.

GMAC took her past due amounts, about $15,000 and placed them into the principal balance, marked the interest rate to 1% fully amortized for 5 years, with an ARM beginning after 5 years, 2.65 over LIBOR.

Her new payments are $2,533 per month, principal, interest, taxes, and insurance.

This instantly solved her despair. It maintained not one penny of principal lost. Allows her to steady her home, she is a single mother of two teenagers, and begin the process of “digging out” from this mess.

This allows for safety to reign in the solution. People in despair do not stay healthy, and can not focus on work, home, and parenting very well.

So I for one, say mark all the loans to 1% interest rate for 5 years, or even longer.

But please, before you comment on this matter I have written, go watch the documentary made in 1995 titled “The Money Masters”, and then let me know what you think.