Fixing The Housing Problem 101 for Dummies

Fixing the Housing problem 101 for dummies.

Sean Lewis
January 19, 2009

point of order
This needs NO FUNDS FROM THE GOVERNMENT! WE ARE THE INSURERS OF THE LOAN IF IT SHOULD FAIL.

Hi, Mr. Loan officer I am about to be foreclosed on my home can we renegotiate my monthly payments.

Yes Mr. Home Owner we can with this government backed program.

You understand sir that you are relinquishing your ownership of your home, however you will be able to remain living in your home if you can afford the new payments.

Also Mr. Home Owner you will have the right to buy your home back at the new adjusted price for the next 2 years, and at market price for the next 3 years after that. If your home is purchased after these 5 years have passed you may have to move out if this is what the new owner wishes.

I understand Mr. Loan Officer.

OK, you are paying on a $100,000 mortgage at a rate of 7 1/2%. We will adjust the loan to $70,000 at a new rate of 4%.

This will reduce your monthly payments from $845.27
to $436.27. Can you afford this?

Yes I can and it will allow me an opportunity to become fiscally sound again.

I know I am now a renter with the option to buy, but at least the home will not be foreclosed and I will be able to stay in my home.

Good, Mr. Home Owner, let me verify your income, fax the paperwork to 'TARP PROGRAM' and next month you will be paying your new monthly rent

Ring Ring Ring....

Hello Mr. Homeowner on processing your paper work we discovered you bought your home in 1998 and have $15,000 of equity in your home. We
will give you credit for this.

So now this will reduce your loan to $55,000 and your monthly rent
will be $342.79. Can you afford this?

The total amount of paper work? One page.

This was a scenario of how this plan below would be done.

you can not afford your home.

you go to a the holder of the loan and you cut THIS deal.

With government backing you negotiate a new monthly rent based on a month mortgage at 70% of 2003 market value.

You now have the ability to save money and stay in your home.

This home now does not go on the market as a short sale foreclosure at below market price.

The renter now has two years to save up the 20% down payment and get their finances back in order.

If the renter can not, they have five years to buy back the home at the market rate or the new valuation, which ever is greater.

At 5 years the financial institution offers the home at market value to ALL buyers.

During these 5 years the financial institution is collection rent, and at the sale of the home they will also get cash for the home.

So this stops ALL foreclosures IMMEDIATELY that are not created by a job lost or bankruptcy.

The idea is to stabilize the market and keep people in their homes, as renters paying into the financial institutions or future home owners once they get their finances back in order.

Remember this is just the FIRST leg of the solution, getting the economy back on it's feet is the other. This is why there is a five year period while jobs are brought back into the country and domestic GDP growth is created again through internal organic growth and synergies.

I believe this will stabilize and slow down the falling prices so that deflation will end and the cycle will begin again.

Which is better, shaving 30% off the value of the home and keeping the existent owner in the house as a renter for 2 years with the opportunity of buying back their own home in 2 to 5 years? keeping this foreclosed property off the market for 2 to 5 years to help stop deflation.

Or evicting the family, and having a property empty with no revenue coming into the financial institution and one more property contributing to the deflation of home prices by being offered far below the surrounding homes and NEW homes being built.

This will fix the housing problem, however with 10 months of inventory on the market the effects will not occur until the inventory is worked through.

Also this needs NO FUNDS FROM THE GOVERNMENT! WE ARE THE INSURERS OF THE LOAN IF IT SHOULD FAIL.