A few of you have asked for a summary of our Solution to the housing crisis to pass along to friends, family and other interested parties. So here it is — A Solution that Works in fewer words:
- At the core of the financial crisis is the housing crisis. The problems in the banking system are the “symptom,” not the “problem.”
- Increasing supply due to foreclosures and less qualified buyers causes home prices to tumble downward, which causes more foreclosures, which causes prices to tumble downward even further…
- The $700 billion bailout does not address this – it does nothing to forestall the tide of foreclosures. It also has the potential of administering random indiscriminate benefits to homeowners.
“Triple Witching Housing Syndrome”
- Homes diving in value;
- Uncertain and significantly increasing monthly payments;
- Principal INCREASING with each payment (negative amortization).
Four Stakeholders’ Needs Addressed
- Homeowners in trouble
- Homeowners NOT in trouble
- Government and Taxpayers
- Investors/Owners of the Loans
- Fix certain categories of loans at 30-year FULLY AMORTIZING subsidized low interest rates (4.5%-5.0%).
- Eliminate prepayment penalties.
- Offer double tax deduction for “writing off” any accumulated deferred interest (or negative amortization) currently on homes.
- Affirm trustees’ of securitizations and servicers’ ability to modify loan on behalf of entire securitization.
- Stabilizes home prices and stops fall in home values for ALL homeowners (including those not in trouble).
- Does not FORGIVE a dime of principal (very important for stability of home prices).
- Allows homeowners to STAY in home with fixed affordable payments that amortize principal (light at end of tunnel).
- Gives investors higher odds of recovering their investment in these loans/securities vs. expensive foreclosures and resale in declining spiral of housing market.
- Can be implemented in a very short time.
- Costs the tax-payers a fraction of the cost of the $700 billion bill (approximately $50 billion to subsidize the lower fixed rate).
Click here to download the PDF version of the Summary so you can print and share it with friends, family and others.