Monday, February 09, 2009
Last updated: Thursday, March 12, 2009
Refi the USA, in lieu of Stimulus
Please review the following as an alternative to the Federal Stimulus bill. Please assert your commentary in the comment fields below this proposal.
This document proposes a clear alternative approach to the Stimulus bills.
The tenets of this proposal will quickly deliver the desired effect of market stabilization, restoring confidence in the markets, and thereby enabling access to credit. This proposal will have a swift impact, without the need for ongoing government spending.
The government incentives requiring banks to extend loans to "underqualified" borrowers, as well as the investment banks pushing the limits in vast numbers of loans of what is a reasonable risk, collude to form what amounts to a Ponzi scheme, with the distinction of involving so many various parties in government, mortgage lending, real estate services, and other investment banking, that prosecution in an efficiently and swift time frame is not possible for the near term to create any positive impact upon the confidence levels in the markets.
With relatively minor government expenditure, banks, and local administrative services, a strong and deep keel will set into the deep waters of our economy, stabilizing markets and restoring confidence.
Confidence in values will increase, credit resources will open, the inventory of homes will decrease, demand for new home starts will then increase, and jobs will spawn throughout the entire cycle owing to the 90 days hiatus from payments restoring ability to pay and decrease interest liabilities by individuals and businesses allowing for expansion of business.
Therefore, it is proposed:
Immediately Stabilize the Underlying Asset Values.
For any home sales in the next Two years, the minimum sales price allowable by law shall be determined as the lesser of the last mortgage property appraisal or the last Tax Assessor’s valuation prior to January 1, 2007. Arguably, the last time the market can be said to have been functioning was prior to January 1, 2007.
Since individual States will likely refuse to waive the associated Intangible Taxes for each loan refinance, it could be possible to use Stimulus funds to reimburse States for the associated Taxes.
After Two years expire, the minimum allowable sales price shall decrease by Ten Per Cent per year annually over Five years. After the Seventh year, the open market shall dictate pricing.
Refinance Every Home Loan in the USA.
Once home values are stabilized by law, every homeowner in the USA shall be refinanced to a Thirty year Fixed Conventional Mortgage Loan at the preferred borrower’s market-based interest rate, currently 5.1%. Each homeowner shall enjoy 90 days hiatus from payments.
Restore Consumers Confidence in the ongoing Cost of Credit.
For all inhabitants, including aliens resident legal or otherwise, of the United States holding credit cards and other unsecured consumer related credit card debts, all outstanding balances of credit card debt shall be assigned no more than an 8% interest rate, and debtors shall enjoy 90 days hiatus from payments. For a period of two years from the date of the bills enactment, credit card interest rates shall not exceed 8%.
Restore all Home Equity Lines that the homeowner had prior to January 1, 2007. Affix a maximum interest rate of 3.5%, which shall endure for as long as the current homeowner remains in the property.
Directly Fund Access to Education. For EVERYONE.
All outstanding college loans and any subsequent college loans for the following Five Years shall enjoy a maximum interest rate of 3.5% and no origination fees shall apply.
Students shall not be required to make payments during periods when they are earning less that 50% of the Average Household Income in their Metropolitan Statistical Area or County, which ever is smaller.
Enable Businesses to Invest and Expand.
For all businesses, any outstanding balances of debt shall be reassigned an interest rate not to exceed 8%. Any subsequent borrowings shall be assigned a rate of more than 8% for a period of Two years.
Acknowledge Lending Practices Have Been Basically Unfair, Possibly Illegal.
We must admit meaningfully that a wrong has occurred, and these people damaged deserve meaningful
The members of this category shall enjoy the aforementioned refinancing if they are able to retake their home.
Dispossessed homeowners shall be restored financially to their status before dispossession.
Where the home has already been resold, the disposed homeowner shall be reimbursed the lost equity in the property existing as of January 1, 2007. In either case, all dispossessed homeowners shall be reimbursed for any expenses related to the dispossession such as storage of personal effects, health care, loss of wages, or other provable expenses and damages. and swift redress.
The source of reimbursement funds shall be: TARP funds where the mortgage bank made no attempt to perform a workout with the homeowner OR Stimulus funds where a good faith workout was attempted by the lending bank.
Where the home was purchased by speculatively, by non-property occupying owners, the property shall revert to the original owners. The investors made whole during the transaction. Investors were behaving in a lawful manner, and therefore should not be damaged.
Reform the Banks and the Real Estate Transaction Cycle. (1st draft)
Where possible and provable, criminal proceedings should be brought forth against any parties clearly stepping outside the law at that time.
Penalties for fraud activities such as collusion to perpetrate mortgage fraud shall be increased significantly and shall have federal jurisdiction.
Require Multiple Listing Services to provide Open, Affordable, and Full to the General Public.
This will weed out the dead wood of incompetent agents, and allow real agents to provide better services.
Illegal Immigration, End It. Collect Tax Revenue from the Workers. (1st draft)
Those currently in the United States under illegal circumstances could be paying their full share of Tax Revenues if we simply assign Tax Payer ID Numbers to each migrant worker.
There is no law that necessarily connects Citizenship or immigration status with the ability or responsibility to pay Taxes. Therefore, taxes can be collected from anyone in our nation, if they simply had an Account Number and access to Identification.
Currently Illegal immigrants would be allowed to stay in the USA, provided they begin paying taxes and register themselves. They would not be eligible for Citizenship owing to the illegal nature of their entry to the country.
To reinstate eligibility to apply for citizenship, currently illegal immigrants shall have to perform community service duties of Five to Ten hours a month for a period of Five years.
This would integrate the immigrants into their new communities by given them opportunities for volunteer service, thereby improving the community in which they now live.
Whereas, previous attempts to direct funding to "bail out" the economy have been misused, subverted, or at the very least experienced far less success than what was generally expected.
Whereas, the current stimulus package will likely amount to an ineffectual misdirection of our nations resources. There are no discernible areas in the economy that can be improved by direct inject of capital. Even if there were areas where investment could make a significant impact, the government is not capable to execute the appropriate spending regime, and, furthermore, the long term financial impact upon our economy, could actually send our nation further into economic decline for an even longer period of time.
Whereas, the mortgage servicing industry faces financial penalties for performing loan "work outs" with mortgagee. The loan investor pools build these penalties into the loan servicing engagement contracts. Individuals with the loan investor pools can also sue the Servicing companies for performing "work-outs".
Whereas, if only failing homeowners are given benefits, the ones who are actually paying are in effect penalized for being financially responsible, since there are no provisions being discussed for those who are in good standing.
Whereas, the manner under which lenders have extended loans during the past decade has proven to have contributed significantly towards undermining our nation's, and in turn the world's, economy.
Whereas, these loans extended by the financial industry amounts collectively to an enormous Ponzi scheme, since the extension of loans to underqualified borrowers directly impacts the investment of the owners who were qualified and depends upon ongoing demand of buyers to maintain the valuations underlying the loans.
Whereas, any prosecution of the perpetrators of the Ponzi Scheme is impractible owing to the diminished responsbility of all the parties involved.
Whereas any relief of homeowners still residing their homes would be unfair to those who, owing to timing of the relief, were unable to enjoy any relief since they no longer have their home.
Bryan “Beau” Grant, BSM, MSMoT
Convivia Group (http://conviviagroup.com)
Commercial Real Estate Brokers