WHAT AMERICA CAN DO TO AVOID A DEPRESSION
A plan offered by a concerned citizen
A plan offered by a concerned citizen
I believe the following plan should be implemented immediately if America is to avoid a long-lasting recession or even a depression.
THE PLAN:
The US government offers every US citizen
a 30-year mortgage at a 1½% fixed rate of interest.
a 30-year mortgage at a 1½% fixed rate of interest.
All financially qualified US citizens, not just those in immediate danger of default, would be able to finance a new or existing primary residence, with a $500,000 lifetime limit of government capital for everyone.
Right now, the US Government is lending money at low interest rates to many companies. Why not lend it directly to the people?
Right now, the US Government is lending money at low interest rates to many companies. Why not lend it directly to the people?
Why the plan will work:
It will stop home prices from falling.
It will prevent most foreclosures and turn the housing market around.
It will let everyone save and spend more.
When the US Government refinances a 7% mortgage at 1½%, it will cut your monthly payment almost in half. On a $200,000 loan, the payment will decrease from $1,330 to $690. And when you save or spend that extra $640 each month, it will stimulate our economy.
It will increase credit availability.
As existing mortgages are paid off with lower rate government loans, the holders of those mortgages will have a cash inflow that will allow them to make new loans to people who, because of lower mortgage payments, will now be qualified to purchase other things on credit. Instead of a trickle down plan to stimulate the economy, this is a trickle up plan that moves funds into the financial system by starting with the people.
It will create jobs.
With increased credit availability and more money being spent, companies will decrease layoffs and expand new job creation.
It will increase tax revenues.
Government tax revenues will increase for two reasons. First, taxpayers will have a smaller interest deduction, because they will pay less interest on their mortgages. Second, as the increase in spending and credit availability stimulate the economy, tax revenues will increase over time.
It will not increase the deficit.
This is a government loan program—not an increase in government spending—so the money will be repaid.
It will reverse the economic decline now underway.
Saving people’s homes while increasing consumer spending and solving the financial industry’s credit crunch will stimulate the economy, resulting in increased tax revenues and a reduction in the deficit. We also believe this plan will increase home values, which will offset some of the financial losses experienced during the past few months..
It will reduce the losses of mortgage holders.
In order to work, the plan would require the government to oversee the refinancing of existing mortgages in a way that takes account of falling market values. The new loans will keep many near-default citizens in their homes; and even though lenders may take losses during the refinancing process, the forced fire sales will end, which will let them reclaim a larger percentage of their capital investment.
It is better than what Washington politicians are doing now.
Although it is possible to poke holes in anything, the foundation of this plan is sound, which is why it will do more than anything being discussed in Washington to turn the economy around quickly and promote prosperity for the coming decades .
It can be implemented immediately.
This plan should be implemented immediately, because the economy is getting worse each day. Washington politicians doled out billions of dollars to big corporations over a weekend. So they should be able to put this plan into action in 30 to 90 days.
US citizens deserve and need this plan.
The American people who helped build this country deserve and need a plan like this—a plan that will help them directly while also stimulating economic prosperity, just like the GI Bill did after World War II.
It will prevent most foreclosures and turn the housing market around.
It will let everyone save and spend more.
When the US Government refinances a 7% mortgage at 1½%, it will cut your monthly payment almost in half. On a $200,000 loan, the payment will decrease from $1,330 to $690. And when you save or spend that extra $640 each month, it will stimulate our economy.
It will increase credit availability.
As existing mortgages are paid off with lower rate government loans, the holders of those mortgages will have a cash inflow that will allow them to make new loans to people who, because of lower mortgage payments, will now be qualified to purchase other things on credit. Instead of a trickle down plan to stimulate the economy, this is a trickle up plan that moves funds into the financial system by starting with the people.
It will create jobs.
With increased credit availability and more money being spent, companies will decrease layoffs and expand new job creation.
It will increase tax revenues.
Government tax revenues will increase for two reasons. First, taxpayers will have a smaller interest deduction, because they will pay less interest on their mortgages. Second, as the increase in spending and credit availability stimulate the economy, tax revenues will increase over time.
It will not increase the deficit.
This is a government loan program—not an increase in government spending—so the money will be repaid.
It will reverse the economic decline now underway.
Saving people’s homes while increasing consumer spending and solving the financial industry’s credit crunch will stimulate the economy, resulting in increased tax revenues and a reduction in the deficit. We also believe this plan will increase home values, which will offset some of the financial losses experienced during the past few months..
It will reduce the losses of mortgage holders.
In order to work, the plan would require the government to oversee the refinancing of existing mortgages in a way that takes account of falling market values. The new loans will keep many near-default citizens in their homes; and even though lenders may take losses during the refinancing process, the forced fire sales will end, which will let them reclaim a larger percentage of their capital investment.
It is better than what Washington politicians are doing now.
Although it is possible to poke holes in anything, the foundation of this plan is sound, which is why it will do more than anything being discussed in Washington to turn the economy around quickly and promote prosperity for the coming decades .
It can be implemented immediately.
This plan should be implemented immediately, because the economy is getting worse each day. Washington politicians doled out billions of dollars to big corporations over a weekend. So they should be able to put this plan into action in 30 to 90 days.
US citizens deserve and need this plan.
The American people who helped build this country deserve and need a plan like this—a plan that will help them directly while also stimulating economic prosperity, just like the GI Bill did after World War II.
Contributor and spokesperson: Dennis F. Paulaha, Ph.D. Economics
604 comments:
«Oldest ‹Older 401 – 600 of 604 Newer› Newest»I have read the piece 3 times now. I believe in the simplicity of the idea and hope that for once tose in power from the president elect down to the lowliest local public official will get on the right side of an issue for once. lets do this thing.
Bob Charlton
Germantown, Tennessee
My Family is working so hard... we do live beyond our means, we did a 30 year fixed mortgage. We have one car paid for with over 125,000 miles and one small nissan truck for my husbands work - he is a carpenter.. I work administrative in the financial industry - get my point? we are struggeling work for my husband is little or none. I havent had a raise in years and barely any benefits. PLEASE PLEASE HELP THE RESPONSIBLE HARDWORKING - INSTEAD OF THE IRRESPONSIBLE NOT HARDWORKING - THIS SOLUTION IS SIMPLE, EFFECTIVE AND MAKES 100% SENSE -THAT IS WHY IT WONT HAPPEN!!!SAD!!!
http://loosechange911.com/finalcut/ if you want answers to your questions why? start here this will get you started and open your eyes to tyranny and the scope of corruption behind our collapse.
This is perfect, I work in real estate and contracting where the residential work is very, very slow. My industry employs many people via subcontracting through the course of building 1 home. Lowering the rate will not only entice people to build again, once the building restarts more jobs will be created. It only makes sense.
YOU WANT ANSWERS tune into www.inforwars.com WAKE UP AMERICA The distruction of our country and constitution is being done on purpose for the new NORTH AMERICAN UNION google it. No more MEXICO no MORE Canada no more United States just ONE COUNTRY!!!! google concentration camps, yes I said concentration camps here in the US. Guess what the gov't is gearing up for? please this is your wake up call!!!!!!!!!!!
At last! Common sense has FINALLY risen to the top. The PEOPLE are the driving force of any economy, not the institutions that want to control it. If XYZ bank gets $25billion from the gevernment to lend, but puts tight criteria on who they will extend credit to, then chagres 24.99% interest on that credit, then says whoops, nobodoy qualifies so we can now show great profits which the board of directors touts as the reason to grant massive bonuses to the executives who caused all these problems in the first place, that'll really add stimulus to our economy, won't it!
I've bent the ears of all my friends and family with my comments that the original $750 billion bail-out money should have gone to the people so that it could trickle up instead of trickle down when there is no force from the government to ensure that trickle down.
It now appears that one bail-out recipient (AIG, I believe) has re-named their bonuses as "retention pay" to get around the limpid requirement of "NO BONUSES" from bail-out money.
Also, any corporation that received bail-out money should not be allowed to donate to the poltical parties or individuals or inaguration comittees for the next four years. Does kind of smell like "pay back" (thanks for getting us the money) to the politicians.
Now, President-elect Obama that would be REAL CHANGE if this plan was implemented!
It makes sense that is why the idiots in DC won't do it. Sfter all what's in it for them.
Thank You Dr. Paulaha!!
Awesome plan, far superior to anything the politians could ever come up with.
I have been studying the idea of sovereign credit and/or Douglas Social Credit (National Dividend paid directly to each U.S. Citizen from the U.S. Treasury) as an economic stimulus. I think your idea is better and stands a better chance of approval, because so many are unable to comprehend and appreciate the idea of sovereign credit.
This plan will have the same effect to increase the velocity of money flowing through the economy, counteracting the effects of global over-capacity, deflation, unemployment, etc. Many of our problems stem from people having to go further into debt to buy what the economy produces (i.e. the GNP must be bought by someone even if they must buy on credit). This is a structural problem we must deal with and your plan would help a lot.
As for the loss of revenue to the Banking and Finance Industry under this proposal, I say "who cares". At the typical mortgage interest rate of 7%, the public has been getting gouged by the banks for years. Due to Fractional Reserve Banking, the banks never have the full principle amount at risk for any mortgage. Therefore the banks have been over-compensated relative to their risk; Mortgage interest rates should have been much lower than 7% all along. To much money has been diverted to finance capitalism -- the banks are getting too much money to play with, and what did they do with it? They created fake investments -- derivatives, CDOs and CDSs, which have become worthless. There must be consequences for malinvestment.
I will be contacting my Legislators asking they to support your plan.
Great suggestion. I totally agree. As a concearned citizen, you have a much better idea than anything our politicians have come up with. This is something that no CEO's wiill profit from, just a large chunk of working Americans. For this reason politicians probably won't go for it. There won't be kickbacks in it for them. Thanks, Sandra S. Wages
The mainstream media needs to get on this bandwagon and promote the hell out of it. Typically, the government should stay out of the way but with millions being channeled in the wrong dirction -- this plan appears to be a win,win,win solution and a serious recipe for a quick turnaround.
Yes, I agree please implement this plan asap!!!
WHAT THEY SAID!!!DO IT NOW BEFOR IT IS TOO LATE TO SAVE ANYONE!!!!!
A great idea. Unfortunately it will never get off the ground. Those that are in a position to change the rules are the ones benefitting most from the way things are. If we had an honest majority in congress this type of plan might have a chance. The majority of those in congress are too busy lining their pockets and chasing power.They live in a different world.
What a great idea!!!! This would get money directly to Americans instead of giving money to banks that obviously don't want to lend it to average Joes. They are using these funds to buy other banks for god's sake!
we may have to all come together and pay a lobbyist to get this across.....
Brilliant plan. We need more creative thinking like this to help the population succeed instead of the Washington way to keep more people dependent on government and on the dole.
I am a Coldwell banker Realestate property broker. This is the first plan that I have seen that the buyers would have incentives. The present mortgage lenders would have to create new markets for their products to be profitable. This should be taken to the next level. The dream of owning a home and pride of ownership would enhance our great nation. Henry Jons, Coldwell Banker Premier Realty Group, Sioux City, IA.
This is an amazing idea! Why is this idea not receiving the press the auto bail out or bank bailout is? This would save the entire economy and help millions of Americans and help the country! How do we bring this in front of the White House?
On the surface this sounds wonderful but what are the implications of creating this much extra funding (loans) and how does it compare to the loans being considered currently?
It won't Happen because it makes sense. NO PORK, Just common sense. You forget that when the executives get promoted or elected they leave their common sense behind. The only time when they remember is when they look behind them to see who's running against them or who has caught onto them.
We on MAIN STREET are sunk.
I also suggest a 5 year moratorium on sales and personal property taxes for American automobiles purchased from 2009-2014, and a permanently and significantly lower sales/property tax rate for American cars purchased at any time, new or used. Your mortgage plan is truly a great plan, and it truly reflects CHANGE, not the lowercase, wimpy, false hope change we're looking at for the next four years. I hope someone runs away with it in Congress--they'd be elected the next president!
You know why else it won't fly? Because it cuts the mortgage companies and the banks out of the existing greed-driven profiteering scheme designed to result in foreclosure and bankruptcy for the citizens and gross overpayments and profits to the corporations. Leveling the playing field in the favor of the citizenry will tip the flow of the money away from the big corporations, and since these big corporations have these congresspeople bought and paid for, there is no way it can get off the ground.
That said, I agree that the politician that can get this through will be elected the next president!
This plan is GREAT! A petition should be started and we the people should be able to sign on and send it to the govt.
I don't want the government running a mortgage bank--they can't even run a government! What makes more sense is to pass a law requiring that all mortgageholders must renegotiate the terms of all loans upon request of the mortgagee, to a 30-year fixed 1.5% loan. And how will the government pass that law? The same way they passed the law requiring the same lenders to lend money to unqualified borrowers with insufficient income. The mortgage companies aren't entirely to blame--don't overlook the fact that they lent unqualified borrowers money under shady terms because the government REQUIRED them to do it! Let the government REQUIRE them to cap their interest rates instead. There isn't enough money in print for every debtholder to call in their debt--interest is not actual money, it's money that only exists in theory. It's high interest rates and debtor culture that collapses an economy. Let's allow America to get OUT of debt, and since our government is such a horrible example in this area, maybe the people can teach it a thing or two by paying OFF their low rate mortgage, paying off car loans and revolving debt, and saving and not spending the difference to pay CASH in the future. What a concept!
FABULOUS IDEA!!!!!Unfortunately the illites who designed this collapse now have over 7 TRILLION dollars and have moved it off shore. They don't care if the economy fails... this is there plan. As our economy goes down they come in and buy up everything pennies on the dollar. So what is the insentive for them to do this? The public needs to wake up to what really is going on. Start by googling Bilderberg group, or eugenics, or the club of Rome documents, or operation garden plot, how about Rex 84. People this is not the time to even consider our government cares about you, they don't. Our soverignty is being lost, the constitution is being stomped on and this is just the beginning. Google Alex Jones, this guy is fighting for our republic and is trying to save it. They are working on controlling the internet, that is why while you still have time start researching the NEW WORLD ORDER, there is a reason there are 700 consentration camps already sent up here in the US. Time is running out for all of us if we don't open our eyes to what is really going on.
What a great idea now we have to get it out to all our friends and family and ask them to send it to their friends and family and keep this moving through the power of email and the internet The buzz will become a roar that Washington can't ignore!
I think this is a great plan to help get America back on it's feet and get a lot of people their jobs back. Why didn't our President and his people come up with this idea, instead of the bail out plan that seems to have failed so far.
Did you people actually read this plan? Jesus, if you intend to hate your children and grandchildren, by all means, do this. Otherwise, get a grip on your socialism-inspired visceral reaction and ask why you would want to do something that has the effect of devaluing the USD by another 110 trillion that will all miraculously be paid back due to the magical incantation of "loan", but still at less than the rate of inflation and fed debt, to enable the entire country to attempt to buy 500k in real estate, spiking real estate prices again, spiking oil prices again with another devaluation, causing all the countries that hold huge quantities of our currency to get really unhappy, for a plan that has as two of its stated goals the facilitation of still more American credit purchases and an increase in tax revenue for the government's professional spenders who are largely responsible for the mess we're currently in.
This is brilliant! As the sky is falling, this truly is the first plan that doesn't scare me, but excites me! As many have said, can we really make it happen? Let's get it to MoveOn.org and get them on the bandwagon. In numbers, we can make it happen.
This is by far the best plan I have heard so far. Although I do not have a college education I have sit for many hours thinking that something like this is the only thing that will get us out of the down slide.We need to stand up and be counted as to what is best for us.
You should be running for President!!! I can't see a downside to your plan,and it will solve so many problems for the people who have been paying for Big Businesses mistakes...the taxpayers. Unfortunatel it will never happen because it is an intelligent solution to an unprecedented problem,and the Gov't
doesn't operate that way.NO...it is their plan to break it if it is running,stop it if it is making progress,confuse it so nobody can understand it anymore,and definitely put the kabosh to it if there is no special interest groups benefitting from it. I know...I'm very negative,but thank you for that wonderful story-it was almost like hearing a bedtime tale when you were a child.
This sounds like a great idea. If it's that simple why isn't anybody doing anything about it??? Does Obama know anything about this???
If THIS IS REMOTELY DOABLE IT WOULD BE FANTASTIC...
COMMON SENSE IS ALWAYS THE BEST MEDICINE
Fantastic plan! I makes sense. It is our money being used, so why give it straight back to the very people who caused the problem in the first place? By offering new, low interest loans to mortgage holders, whether in default or not, the banks get their money back so they don't fail, homeowners wont be forclosed on, and people actually have more money to spend. Talk about an economic stimulus package!! And it wont be because the government just printed money which just devalues all of it! Too bad it makes so much sense. That fact practically guarantees that the government WILL NOT go for it.
Oh well.
Joe
This plan is too simple and functional for Washington to implement. Plus, there is little opportunity to misuse a proposal like this to the benefit of large campaign contributors. It is not a get rich quick scheme for the friends of Barney Frank, Chris Dodd, Nancy Pelosi, Henry Reed and all their Republican counterparts, so it has no chance of getting serious consideration. Our elected officials would rather throw trillions after bailouts that will only impoverish our future rather than try something that may actually work.
Hi Dennis,
I really like your proposal posted in USA Today this week. I'm 56 years old. Neither I or my family has ever been in debt other than my mortgage. In the last 4-5 years I've fallen further and further behind. Why? The company I worked for failed in 2004. I've been working for half the income since then. Secondly, everything except my mortgage has inflated in value: groceries, gas, education, auto cost, property taxes, etc. Little by little I, as other Americans, have fallen into debt. Now I have $80,000 in unsecured dept that I have little hope of working my way out of. With our decaying economy, I see no light at the end of the tunnel. Your proposal would be such a light. Thank you for your thoughtful consideration of the issue.
This plan's simplicity may be the only detriment. What a great concept..instead of bailouts, give a low interest benefit to the consumer and motivate spending and investment in the economy.
I applaud the concept. As a former long-term banker, the only downside is the lost interest to primary conventional lenders. But, the typical orignination fees and sheer activity can at least bolster this loss to that specific group. Let's get behind and push into the mainstream!
I agree and support it. If I can save half on our mortgage, would in turn spend some or all of the savings.Would definitely consider buying a second American car that would support our friends in Detroit without having to resort to handouts like they are proposing right now. Thanks!!!
Unfortunately we all know this will NEVER happen because it would require an act of God to get Washington to approve something like this. Although I think it is a simple and fair approach to solving this mess we are in. I'm surprised there are not more comments posted here.
Right On! Is this plan too simplistic or will it really work? However, it makes sense to me. Buy a new American auto and get a direct tax credit. Give every American adult some of the Bailout Money instead of the banks and auto companies and they will spend it more wisely than the current recipients.
I realy think this plan can work. Currently their are FHA loans being offered at 3% to first time home buyers. These loans are Govt. backed, but administered by local banks. The same concept can be applied at 1.5%, to all who are interested, and take the place of FHA loans. I think you do need a cap on the amount you can apply for, in order to keep liability in check. I think you should be a leagalized US citizen in order to qualify for the loan. It must be used for primary residence only. Not everyone is going to need the loan. People who paid their mortgage off, or only have a couple of years left might not be interested. Another idea to help people save money and also help our govt. get out of debt. would be to lower the current length of time it takes for US savings bonds to mature. By doing so, it would encourage more people to by them. Another idea would be to have every tax paying person to pay a seperate education tax. A flat tax for public school funding. Currently, the homeowner pays 58% of their county tax to support their local school districts. While residents in trailer parks, condos, apartments,& townhomes, pay a much smaller amount. The homeowner bares the burden of the tax infrastructure. This would lower the tax burden on homowners by at least 30%. I hope these ideas take flight.
My thoughts;
Give all middle income (50K-130K) taxpayers a 300K tax free check.
Let them stimulate the economy. You would know in about 1 yr if it worked. This would touch more tax payers lives than the auto industry bailout.
This will cost the government (my money) less then the auto bailout.
Let the auto folks go belly up, they have been paid very well to screw this up so far, let's not pay them more to screw up better.
Strip all the Auto Exec’s wages and bonuses and perks for fraud of the public and send them packing.
You know what will come up? The board of directors will say “well, we have to pay these kind of wages and offer these kind of perks to get this caliper of person”.
The WHOLE PROBLEM is this kind of person isn’t looking out for the good of the people, the best thing for the company, it’s how much can I line my pockets with before I leave and not be held accountable for anything?
Since the Government (just like the Board of Directors above) now has a Large interest (our Tax dollars) in the Lending institutions, lets cut our home loan interest rates in half.
The guaranteed wages of the School teachers, City works will be adjusted accordingly, although they will reap the rewards of the homeowner interest rate reduction plan.
Cap and reduce all government worker benefits across the board from the State Level to the President. Reduce or terminate the benefits as needed just like business can to retires today. Don’t worry about it, it’s for the better good.
Everyone should feel the pinch on both ends, at on point or the other.
Great plan on the surface, but it fails. I may come back later and point out the ways in which it fails, but if you really dig past the surface and think about it you cannot deny that it fails.
This is a great idea. The government should think of us (the American people) first rather than spend millions and millions of tax dollars on Iraq and Afghanistan. If these two countries can't get their act together then that should be their own problem!
You are getting a sneak peek at my column that will appear in the Dec. 17 issue of the Calhoun Times, a twice-weekly newspaper in Calhoun, Ga. Good luck, Dr. Paulaha:
I'm not experienced enough or smart enough to say for sure what we can do to stop the current economic woes in our country.
But I do like - at first glance - what Dr. Dennis F. Paulaha said in a full-page ad he bought in the Dec. 9 issue of USA Today.
His idea, which is set forth below, is for the U.S. government to offer every citizen a 30-year mortgage at 1½ percent fixed rate of interest.
He followed that up with a list of reasons why he thinks Congress should consider it. I'm sure it will never fly in D.C., but I think it's worth getting his plan out there for people to at least examine and decide if it might work.
See what you think, and if you have any comments to make, you can leave them on the Web at www.RemortgageAmerica.blogspot.com.
WHAT AMERICA CAN DO TO AVOID A DEPRESSION
A plan offered by a concerned citizen
I believe the following plan should be implemented immediately if America is to avoid a long-lasting recession or even a depression.
THE PLAN:
The US government offers every US citizen a 30-year mortgage at a 1½% fixed rate of interest.
All financially qualified US citizens, not just those in immediate danger of default, would be able to finance a new or existing primary residence, with a $500,000 lifetime limit of government capital for everyone.
Right now, the US Government is lending money at low interest rates to many companies. Why not lend it directly to the people?
Why the plan will work:
It will stop home prices from falling.
It will prevent most foreclosures and turn the housing market around.
It will let everyone save and spend more.
When the US Government refinances a 7% mortgage at 1½%, it will cut your monthly payment almost in half. On a $200,000 loan, the payment will decrease from $1,330 to $690. And when you save or spend that extra $640 each month, it will stimulate our economy.
It will increase credit availability.
As existing mortgages are paid off with lower rate government loans, the holders of those mortgages will have a cash inflow that will allow them to make new loans to people who, because of lower mortgage payments, will now be qualified to purchase other things on credit. Instead of a trickle down plan to stimulate the economy, this is a trickle up plan that moves funds into the financial system by starting with the people.
It will create jobs.
With increased credit availability and more money being spent, companies will decrease layoffs and expand new job creation.
It will increase tax revenues.
Government tax revenues will increase for two reasons. First, taxpayers will have a smaller interest deduction, because they will pay less interest on their mortgages. Second, as the increase in spending and credit availability stimulate the economy, tax revenues will increase over time.
It will not increase the deficit.
This is a government loan program—not an increase in government spending—so the money will be repaid.
It will reverse the economic decline now underway.
Saving people’s homes while increasing consumer spending and solving the financial industry’s credit crunch will stimulate the economy, resulting in increased tax revenues and a reduction in the deficit. We also believe this plan will increase home values, which will offset some of the financial losses experienced during the past few months..
It will reduce the losses of mortgage holders.
In order to work, the plan would require the government to oversee the refinancing of existing mortgages in a way that takes account of falling market values. The new loans will keep many near-default citizens in their homes; and even though lenders may take losses during the refinancing process, the forced fire sales will end, which will let them reclaim a larger percentage of their capital investment.
It is better than what Washington politicians are doing now.
Although it is possible to poke holes in anything, the foundation of this plan is sound, which is why it will do more than anything being discussed in Washington to turn the economy around quickly and promote prosperity for the coming decades .
It can be implemented immediately.
This plan should be implemented immediately, because the economy is getting worse each day. Washington politicians doled out billions of dollars to big corporations over a weekend. So they should be able to put this plan into action in 30 to 90 days.
US citizens deserve and need this plan.
The American people who helped build this country deserve and need a plan like this—a plan that will help them directly while also stimulating economic prosperity, just like the GI Bill did after World War II.
Unfortunately, the politicians will not do anything for working middle America. We are just the responsible individuals who work, pay our bills, pay our taxes and elect them - we are not the wealthy or poor! Do I sound bitter? I am sick of the greed and corruption and I don't think it will change, but if there is anything I can do to make it happen I will.
I have originated mortgages (responsibly) for the last 7 years and applauded this plan. This idea WILL make sensible housing affordable and given that our economy is largely based on housing, WILL solve many other economic issues by its virtue. The only problem - it's not Washington's idea, therefore will probably not receive much support.
Great idea! Excellent ideas. The *only* issue I have is that the same tards who got us into this mess would be re-financing the plan, and therefore would be rewarded with their windfall commissions on the new loans.
What can we do to get this idea moving?
Thank God for someone who thought long and hard enough to come up with a plan that actually HELPS without getting us into further trouble. Let's save the billions the government is contemplating giving away to people who clearly can't manage money, and implement the first plan that really represents an economic boon.
This is a fantastic idea!!!
Here's why it won't work:
You are operating on the FALSE assumption that the US Government (IE Politicians) actually give a damn about the american citizien/taxpayer. THEY DON'T!!! The economic downfall of the US was staged so that european interests can very cheaply buy controlling interests in the US. It has nothing to do with economics or any other influence. It was orchestrated by politicians in order to make it easier for their investors in China and Dubai to purchase more of the US.
YES, this is a great idea. NO!!! it will never be implemented.
I'm all in. When does it start? Where do I apply? Just think if this went into action the citizens would have the cash to bailout the car companies, by purchasing their new hybrid and electric cars. And put me incharge of the car companies and I'll show them how to think for a better world and not their personal pocket books and extravagant creature comforts.
This solution appears to make more sense than any other I've seen. Cut out the middle man and help those directly, instead of offering a bandaid approach with no long term vision for recovery. In addition, as others wrote, corporate greed will be eliminated, employment should be stable and the housing market will stop sliding.
This should be a win/win for all concerned. How do we force it forward?
put this informatiom on CNN and the other media blogs...
I fully support the recommendation!!!!
We pay our bills on time an making difficult choices on our budget every month. We need a break too.
For get the CEO's who are crooks - take care of the middle class!!
This seems to make a lot of sense. What else can we do to support something like this happening?
As we used to say in corporate America...a paradigm shift. Away from doling out money to corporate management (who got us here in the first place with greed & avarice) to those who can actually apply the savings to their own bills. For all those struggling to pay health ins. premiums, this money could be a lifeline.
Most importantly, keeping more people in their homes, fewer foreclosures, destroyed neighborhoods and families.
I hope this and other innovative ideas hit the radar screen of Pres.-elect Obama's team.
The banking industry will probably raise a stink about this, but hey, they're not making money right now anyway, and after runaway greed for years, perhaps they brought it on themselves. Surely all the bright economic minds can brainstorm to tweak the plan so it is feasible for the banks as well as the general population.
Maybe have the banks administer the mortgage process, service the loans and get administration fees for their efforts. They could then use the funds that they are saving from all the firesale losses on foreclosures, the administrative fees, loans for businesses and home improvement, home equity, auto & college funds, etc.
I agree with previous posts that timing is everything. Pass the link to the article to everyone in your address book and ask them to do the same. Maybe in the subject area, ask your contacts, family and friends, "Will this Work?" Like the author said, people can poke holes in any plan, but it looks like this plan has good bone structure; it may be able to be tweaked and it can get the right people thinking outside the envelope. It would be a colossal bureaucracy to administer, that's for sure.
excellent idea! why has it not gotten more press?
Starting at the 'bottom' with the american people would be the number one thing. Who says if you start at the top with creditors that it will always trickle down to the people? If you give to the people first, we all know we love to spend. Yes we do save of course, but if we had the money and the oppurtunity to spend on a vacation or christmas presents for the children we would. Great Idea!
While I think this plan is well-intentioned, I don't think it will be particularily effective long-term, and would excerbate the conditions that precipitated this crisis in the first place.
If the government is able to actually loan funds directly to homeowners the program will likely be horribly bureaucratic and inefficient, and thus unable to prevent prices from sliding further -- it's improbable that this can be "implemented immediately".
However, in the nightmare scenario that the proposed program IS actually implemented, every rational U.S. homeowner (or potential homeowner) will take advantage of it, and the conditions that created this crisis in the first place will rise up to new heights. Home prices will appreciate rapidly, and with first mortgages backstopped by low-interest government-guaranteed loans, speculation will once again run rampant in the housing market. Americans will again begin purchasing houses they could not afford with the hopes of "flipping" them for quick profits. Banks, desperate for profits after one of their primary lines of business was taken away by the federal government (first mortgages), will again relax credit standards and begin lending to people with shoddy or no credit. The crisis will be even worse this time 'round.
And God only knows how many new house-flipping reality shows will appear on A&E.
I can see the folksy appeal of this plan to hard-working American homeowners who unfortunately bought in at the wrong time, only to see their equity disappear as home prices return back to rational levels relative to rental prices. But really - ever heard of the Case-Schiller Home Price Index? Do a little research before you buy, even if the whole market is rising. House prices don't always just go up, and borrowing a lot of money is risky, even when it's for your house.
Finally... half a million dollars?! Per homeowner? Why? I think this crisis might be good if it teaches people to live within their means. Not every American earns enough money to live in a multi-thousand sq ft McMansion, unfortunately, and if you live on the coast and aren't rich, suck it up and get a townhouse or a condo like the rest of us poor saps.
Your plan is the best I have seen towards getting the economy back on its feet! Thank you.
Oh my - well put!
We received this in an email today from a friend.
Thank you for writing this and ... what can we do to implement?!
This is a great idea lets get it done!!!!!
This is the best idea that I have heard, yet! I am sending this to everyone that I know. Thanks Dennis!
Judy said...
Good idea, but the elected officials will never implement such a no-brainer...they are too busy filling their coffers (both parties are at fault!) For this to come about we need another
Boston Tea Party, but this time dump the politicians in the bay!
This is a great, common sense driven proposal. I've written my elected officials requesting their views and asking for their consideration of the idea. Unfortunately I'm afraid this will in all likelyhood never be seriously considered by Obama and company. What this will do, hopefully, is to illustrate to the naive elements of society just how corrupt our two party political system has become. Vote Constitution Party in 2010!
I love this idea. We've given money to banks and that has done nothing to improve the economy. Where is the promised improvement/stabilization of the credit markets? All I see and hear is companies going out of business or laying of workers because of a lack of access to credit. Give money to people who will spend it! And help lift the burden of debt from the shoulders who need it most. Yes, we all shoulder some of the responsibility for this mess. But some of us shoulder more of it than others and from where I sit, those who are most responsible for getting us into this mess are getting the most help from the bailout. And they are doing nothing to help the rest of us.
Finally a simple and reasonable plan to help everyone and address the hard working American that is making his monthly payments and paying for the mistakes of other.
Finally a plan for the people and not the big greedy companies like AIG.I hope enough people read the article and our govern ment listens to the people that aare taking the hits in every area of their life.
More expensive homes would be bought and monthly notes would not decrease. now we have an even larger energy problem to power all these bigger homes. best to let the free market work itself out without big government meddling.
Politians wake up! Help Americans not banks, automakers, & wallstreet. Dr. Paulaha has a great idea. Make it happen!
We just refinanced our home right before everything tanked. We were lucky to do it. We both have new cars (2005 & 2006 models) and all out other vehicles are paid for, however, this plan would be a great help to us as we do need to attend to some updating of our house. This is one of the best, if not the best plan I have seen so far. Why should we bail out the very people that started this mess in the first place? With this plan I could even afford to hire someone to do the work, thereby keeping someone in buisness or a job, who would then have money to live on, etc., etc. I mean afterall, it is OUR money! But, back to reality. This is a WAY too simple and effective plan for the mansion dwellers in Washington to wrap their tiny brains around. Also, what the most important plan needs to be is HOW TO GET THIS ONE IMPLEMENTED!!!!!!!!!!!!!
How do we get started?
I am certainly not an economist - but this seems like a very simple, easy to implement, highly effective plan - I want to do all I can to be sure that this concept is FULLY explored by our government - please share with us how we can help make sure the idea is fully vetted.
I am very upset and the constant "Bail Out" mentality and this seems to be a much better solution.
This is a great idea.Why can't our Goverment think like this.I was going to write a letter asking for a bail out just to see what kind of response I would receive if any.I surely hope the big guns see this and follow suit.I agree this plan would definately help all of us.
redorr@comcast.net says: At first blush, I loved this idea.
However, on reflection I have several concerns. The government is not an experienced lender or servicer. We are in trouble today because professional lenders abrogated their responsibility to make sure loans made sense because of their increasing ability over the last 15 years to pass off the risks to 3rd parties i.e. securitization and Fanny and Fredy.
I do believe that what is being done today (bank, wall street, and probably auto bailouts) are bandages on an accident victim with serious internal injuries. Here are some ideas to get to the root of the problem.
1. Get consumers spending - The snowball has started down the hill. The real estate crisis started it. It scared us. We reduced spending. Businesses saw sales decline and started to lay people off. The second wave came when those laid off further reduced spending. Sales fell farther, businesses cut more employees. And so on. How do you stop this snowball? My answer is use tax credits to stimulate consumption spending. But, we must have time limits for qualifyng, otherwise, people will put off. How about a 40% tax credit spread over 5 years for a residence purchase? How about a 50% tax credit for the purchase of a new big 3 auto purchase spread over 3 years? In both instances the purchase must be consumated before June 30th 2009. I am sure you can think of many more inovative ways to stimulate consumer spending with tax credits.
2. We must fix the lending system. Lenders must have enough credit exposure to make sure they will not make foolish loans. We need to eliminate brokers (third party loan originaters). We must eliminate CDSs (Credit Default Swaps) unless the product is regulated. Boy, were we dumb! (Yes, you, wall street). Troble is, the dumbest are already gone! We must also eliminate the conflict of interest that exists with the rating agencies. They cannot be paid by the companies they are rating! What kind of sense is that? I am sure there are many other regulatory issues that need to be addressed. The government should address them by getting together knowledgable people into short lived committees to investigate, recommend, and disband.
Ok, enough from me. Let me hear from you if you will. What else can we do and how can we get it done.
Sincerely
a concerned citizen
Bob Dorr
i love this idea and believe it couldn't possibly be worse than what has already been done even if it fails completely. so i say try it.
What a novel idea. Instead of giving billions of dollars to the irresponsible banks and auto manufacturers, give it directly to the consumer, the little people as felon Leona Helmsley called them. I like the fact that this proposal is open to all US citizens, not income dependent or to just new home buyers. As a retired person who worked for everything I have, I am tired of paying for everyone else because I was successful and paid for my own education. Since my wife and I both worked, put ourselves through college and MBAs and never had children we pay a lot in taxes. Virtually all tax incentives that are implemented are income based and we don't qualify. I am tired of paying for all the slackers, illegal immigrants and welfare recipients.
Mike
MBA
Yes, this does sound like a simple, wonderful idea; however, do we want the US Government essentially "owning" our homes? That scares me to death.
Shirelle
As people cannot afford their homes, they are either not getting medical care they need or are ignoring medical bills. We have to stop the bleeding! This is the best solution I've heard.
Can anyone pay one and a half percent on any mortgage with no job?
bravo
Question is why hasn't Congress acted on something like this, so far nothing they have done is helping the average American. What do we need to do to get Congress to act, it seems as if they are not listening to anything but helping Big Business, Banks, and it is not reaching the average American. This plan would be so easy to install and give America an instant shot in the arm. It could be set up to adjust in Five years, to a slightly larger sum. I agree not to give money to the Big Banks but to loan it to the working class. Also since we are loaning so much of the tax payer's money to the Banks, I think it's time to put a law in effect to control the interest that we pay on our credit cards, this would give another big shot in the arm for our economy, say instead of paying 28% interest on most credit cards but maybe 5 %, this would give the average American a lot more money to have to put back into the economy, to be able to purchase autos, it would and should be did now that we are supporting the same companies that are raping the average American with such high interest. Again when are we as tax paying Americans goin to act.
This is a great idea. I would add that any financial institutions that want to be considered for a bailout must agree to adhere to this proposal.
I would like to see something like this implemented but -alas - the politicians of this country would never allow this type of plan to exist. It does nothing for a core group of constituents and does nothing for them personally. The days of public service are over. Now - it's what can I get out of it. Very Sad.
I found this proposed idea in USA Today - clipped the page out and brought it to work. I think this is a fantastic idea. I have also posted this link/idea on change.org -
Most Americans don't agree with bailing out big corporations with taxpayer money. But all Americans would buy into this simple concept. Unfortunately the government will never go with such a plan because it would cut out the banks and mortgage company's.
If this ever happens, investors, not home owners, will simply refinance their assets and take on new debt for lower rates. In other words there could possibly be another buying frenzy, but exclusively and only for the upper to upper middle class. The disparity between rich and poor will actually be wider.
When the rates are lifted, they'll make a killing driving home prices again. This in turn can lead into false speculation as we see in any bubble.
This is essentially what happened when the Fed lowered the interest rates early 2000s--why repeat it again?
As much as I hate it to say it, but increasing the dollar's interest rate to 15-20%, like in the early 80s, might serve to stablize the dollar in the long run and lower the prices of home as well as force banks to take stricter measures when approving loans.
Spot on.
I was just discussing this type of solution with my wife. As a side note, I'm a small business owner that will probably need $50,000 in working capital to survive the next year. Where is our help??
If our government really wanted to help Main Street, they would follow this plan! Don't think they do. But I can do my best to try and change their minds.
Thanks!
I wish there was some way to make this happen-this would help me save my home I am about to lose
Great idea
How do we make anyone listen
I like it, though it needs to be accompanied by a new approach to land-use planning, so the small town's of America aren't turned into strip malls and subdivisions, the older urban areas are revitalized, and farmland and open spaces are protected. It also needs to be accompanied by a new approach to food and energy production.
Ed Fallon, for state rep, Iowa
This is a great idea. How can we make it a reality?
So how do we proceed? Do we go to congress? Publish a petition and then what? We all agree this is a great idea. Try getting the big banking institutions to back it. They bury their heads in the sand until they are ready to go belly up. They couldn't care less about the average little person. Their view is from the top and as we all know, people look like ants from an airplane.
Sent this to Rush, Neal Boortz and Sean Hanity figured it couldn't hurt. Great idea, makes sense and simple to do, sad part is banks won't make money off it (at least in their minds) and since it makes sense politicians will never let it happen. Has to be a stupid idea like sending good money to bad companies who have a high risk of failure, what has happened to this country when greed has superceded integrity.
I am all for this plan..I think it's brilliant!
Great idea, finally some one come up with a real way of helping the American people, but you know, make to much sense, so of course this politician will not approched this option.
The people that really need the help are not getting.
Investing in American people woulkd be the right thing to do. Be able to lower the interest rate is a great solution to some of the problems we face.
Kenneth, New Orleans, Louisiana
This is a amazing concept..Gee the gov is cutting the lending rate to zero.. you mean the governement with this plan could actually become a money making group and save the country.. WOW.. lets stop saving the banks and start saving the real tax payers that spend money and keep the country alive
Bill
Finally - a solution that makes sense, and gives aid to ALL Americans, including those of us who are responsibly making payments the best we can in these scary times. I just hope that our new President and Congress can see that this is the right way - people first.
Your plan is simple, effective and something that all Americans can understand. To have this implemented would be a dream come true for me. To combine my mortgage with my equity line of credit loan and still have money leftover to spend and save --- I am sure I will never see that day. I hope President-Elect Obama sees your plan!
This sounds like a good plan but it could be made more palitable to politicians if, in exchange for a 1.5% mortgage, the borrower were no longer eligible to claim a deduction for the interest payment on the loan. At that rate the reduction in taxes would minimal any way. Good luck. J. K. Johnston
Brilliant! I say let's do it! By far the best idea that can be laid out on the table!!
I fully agree with this plan as a way to kick start the economy.I thought of a plan similar to this months ago!!The gov. would be paid back in a way very much as if an individual had borrowed the money from their own 401k plan etc.I believe this plan could even get people to "buy" another home [as in the past]before selling their own.Of course stricter qualifying would have to be implimented.Letting banks handle the transactions would allow them their profits.
Because this is a great idea I posted it on change.org - Vote on this here: http://www.change.org/ideas/view/what_america_can_do_to_avoid_a_depression
This is exactly what the American people need. Why would Paulson give billions to his Banking buddies instead of us tax payers?
The banks are sitting on the low interest cash (our tax dollars) and hoarding it, instead of giving the American people lower interest rates. If the banks are getting 0.25%, why the heck is my mortgage still 6 plus percent?
Imagine how much money I would put back into the economy with a 1-2% mortgage rate.
Once again our government has failed us and we tax-payers, middle-class, hard-working stiffs are left out in the cold!
Two major problem with this idea, theoretically sound, but not so practical. Banks and investors make money on interest rates, it's called yield spread. If the banks and lenders have no money to be made on the interest rates, what is the incentive to stay in business? Who cares if you can get a 1.5% on your mortgage rate if there is nobody to buy the paper??? Then, who buys the notes? The Government? Sounds awfully like communism to me, thus the second problem. We've already had the government step in with 700 billion of our money to bail out wallstreet! Now this idea would want the Government to finance every home in America! No way!
A Government big enough to give you everything you want is strong enough to take everything you have
Thomas Jefferson
Let's look at the root of the problem, jobs. Let's aggressively pursue incentives for companies to do business in America.
Let's change our ways of living and stop living on credit. If you can't affford it, DON'T BUY IT!
America has to implement a lifestyle change and stop relying on our Government for solutions, it's not their job!
Conservation, Research and Developement, Education. We have to elevate our philosophy from a manufacturing economy to a technological economy. This starts with education and making a smart generation of our youth.
There is no easy solution to our problems, and, if there were one, would it be worth it?
We have to put in our dues now so our children can live better tomorrow.
I had to come back and leave a comment about the anonymous poster who called this proposal communist.
I suggest that you look up the definition. Oh, hell, I'll give you the definition:
1 a: a theory advocating elimination of private property b: a system in which goods are owned in common and are available to all as needed 2capitalized a: a doctrine based on revolutionary Marxian socialism and Marxism-Leninism that was the official ideology of the Union of Soviet Socialist Republics b: a totalitarian system of government in which a single authoritarian party controls state-owned means of production c: a final stage of society in Marxist theory in which the state has withered away and economic goods are distributed equitably
The proposal on this site has nothing to do with the above.
Banks are failing because they engaged in irrational and greedy business practices.
Putting our mortgages on a more stable foundation would provide the breathing room everyone needs.
Lack of jobs are not the cause of the present crisis, banking and finance industry practices are.
I'm for getting the sharks out of the water so the rest of us can swim around unmolested.
And saying our government can't function is the equivalent of wishing it away. I'd like to see how long all of us would last with no government.
Lack of ethical government oversight is what got us in this mess. If we give up on government, we might as well go back to the cavesl
I think this plan is a great one. I do have a question, what happen to a person or persons whose credit become bad after their house being reposes. Can that person still qualify for this type of loan or program. When they brought their house thinking they can sell the house in 4 to 5 years and use the profit from the house to pay off their debt. But now the house is forclose the debts are still there .
I think this is a much better plan, then bailing out the auto makers. I have been wondering if there is any way to get banks, mortgage companies, the government, etc. significantly lower interest rates. This is so much better thought out and worded, than I could have done. I am spreading the word. I hope those in Washington who represent me and make a differece are listening.
A lucid and inspriational idea that certainly would win the approval of the "Change We Can Believe In" camp. Let's roll it out!
Sign me up! Yes, I have been thinking of this for awhile now. So happy to see the ad. How can I help? It makes so much sense.
Let's not let this movement die. I am all for it.
Carol Ripp
Madison WI
This sounds like a great plan. I would like to see it implemented ASAP! Everybody wins!
Dr. Paulana,
This is simple and easy for all citizens to understand and is also, exactly on target. I believe this single action would reverse the approaching depression for all the reasons you stated and more. Our economy would greatly improve before year end 2009. While other issues cry out for resolution, housing is the foundation of working Americans financial well being and must be addressed first.
In addition to sharing with my business and personal community, I plan to send this article to my U.S. Rep. and Senators. I also plan to send to local and national news organizations. I hope everyone else will do the same.
Please advise of other actions that will be helpful to spread the word.
THANK YOU!
This plan will never work.
We need the govt to stop spending.
We need to get rid of the income tax and let people spend their own money however they want.
We need the people to have more money so they can save more money, not so they can spend.
Spending money doesnt help an economy. Any idiot can consume and spend money, but you need to be thrifty and work hard to produce.
This is the best idea since sliced bread and napalm! I think we shouldn't stop at essentially fixing the prices of homes, but we should try to fix the prices of everything! Anybody should be able to refinance any debt at 1.5%! Just move even more money from the hands of prudent folks to people who get drunk off credit. Come guys, keep consuming! Maybe in the future the US can just issue 300 million million worth of treasuries and give every American 1 million dollars.
Where is the money going to come from?
Jeepers! In the middle of a bad mortgage crisis, let's issue more mortgages?
You are out of your mind if you think that we can give $500,000 to every American and not have inflation go through the roof. Sure, Americans would be able to pay their mortgage, but at the expense of the lifetime savings people who have already paid off their homes. Bail out those who are borrow at the expense of those who saved?
STOP THE MADNESS! Government is the problem, not the solution.
The government does not have any money. We have already spent so much money that we ran out of credit a few weeks back, remember?
Every single person reading this blof owes more than $300,000 to the government already. Are you sure you want to start paying for your deadbeat nephew's mortgage?
If you are, great! Go ight ahead. But leave me out of it.
Great idea even though I don't own a house or plan to own one, I see how this will help many other people.
I usually am hesitant to jump on any band wagon but what Mr. Paulaha wrote in the USA today seemed to make a great deal of sense, and further more benefits EVERYONE. What a concept that we can all be helped. Lately we talk of bail out for subprime mortgage people, bail out for those people who unwittingly took $$$ thousands of dollars refinancing etc. I have honestly thought that was all a crock of bull. I am in the real estate business and have been for over 20 years. I saw people who couldn't afford houses buy them even though I counseled them not too (and they knew they were getting in to deep). I knew so many people who pulled money out of their homes so they could buy new cars, TV's while I drove a 10 year old car and had a 15 year old tv. I saw this writing on the wall years ago and sat back to wait. THEN there is the bailout for all these people who can now not afford their homes AND THIS IS A BIG SHOCK TO THEM!!! I have to say I don't feel a bit sorry for any of them, however, that being said this plan will and can benefit most of America, those in trouble as well as those who lived within there means. Even though this seems wrong, a 1% mortgage think about it. Most people move, downsize or refinance there home within 5% so in under 10 years many of these mortgages will be gone anyway paving the way for higher interest rates, yet possibly saving us in the short term. I hope the politicians can see this.
Get real with this plan. Gov't is currently borrowing just to stay afloat, how much more will it borrow, print or digitize to provide these loans to each home owning american citizen.
The main fallacy with this plan is the belief that consumerism is what creates wealth and kicks an economy to growth. Consumption is the reweard of production.
Government cannot get us out of this unless it gets out of the way. This plan would never work given the current situation of the economy and most citizens.
Not only this but think of the inflationary effects. By the time all this money is out there, Americans would have to repay these loans at the expense of their lifetime savings.
The gov't has zero money, zero, we are in debt for trillions of dollars not counting the 53+ trillion in entitlement spending (medicare/medicaid/ss). We have 70+ million baby boomers yet to retire to cash in their SS checks.
The only solution is to let the market correct itself, let prices fall as they should instead of creating a new aritifical bubble which will soon find a new pin. Let housing become affordable again to your average citizen rather than inflating the prices and once again Americans will use their homes as giant ATMs putting us deeper into the whole just for a quick injection of a fake stimulant.
You cannot continue to give the addict its drug because it will crash and ask for more until the addict completely crashes. You must put the addict in rehab to flush all negative things out. This is so simple yet everyone is looking for a quick gov't hand out. We as a people should take responsibility for the measures we have taken believing in the gov't and truly take action and ask them to cut spending to set the example to the rest of us on how to truly save. We are the largest debtor in the world. This will never work.
Here's a plan, bring all troops home, save trillions of dollars on defense, cut gov't programs that are uneccessary, decrease its size, abolish the unconstitutional FED and give the power and money back to the people, go back to sound money, become fiscally reponsible get out of the bailout frenzy and then we will see some light at the end of the tunnel. Einstein said it best when he said that Insanity is defined as repeating the same actions over and over again and expecting different results.
The plan on paper sounds good, but in reality it cannot be done. Im surprised a PhD would put this out.
However, it would also mean that the government will or can own your home.
this plan makes too much sense for homeowners and tax payers. it's a very intuitive, smart plan. but the gov't will never even consider such a plan. first, it doesn't benefit the families who owns the federal reserve (its not a gov't body). second, this plan hurts the the largest financial institutions - the ones that are in line to receive billions in bailout dollars from us taxpayers to save them from bankruptcy. third, the gov't doesn't want to empower the people, they want to impoverish us, bring us to our knees, orchestrate a little chaos. why? gov't is in business to create crises in order to then step in and provide solutions. the solutions always involve bigger gov't, more taxes and less liberty for us. just look how instrumental barney frank was in creating the subprime bubble under clinton and how he's been on tv every night dictating to us what the gov't will do to solve this problem.
WAKE UP PEOPLE
this is great! do not let anyone take out any more then they owe. so they do not go out and by an rv, or some other toy like they did last time.
Makes sense. sign me up.
I think this plan makes a lot of sense, but would even be workable at a slightly higher interest rate to make it less burdensome on taxpayers.
There should be some limits, perhaps restricting this to a primary residence, not applicable to vacation or second homes.
In order to reduce administration, set it up so that the loans were processed via existing mortgage companies with restricted/set-fee closing costs that are affordable, too.
Interesting concept, and would result in economic stimulation without loss of capital, unlike the $700B bailout that is only benefiting the financial institutions and will likely not result in any return to the government or taxpayers!
Keep on promoting this however you possibly can. Perhaps you should ask for donations to help run additional ads!
This is the best idea my husband and have heard. This nation needs to implement this idea instead of bailing big corporations out and taxing the people to death. We simply can't afford it. People have stopped buying, because we are losing our shirts and are scared to death TO buy anything.
Wake up Washington! Not everyone is making $250,000+.
I agree with your plan, I believe this could work. How can it be implemented? Please if you haven't already done so, forward your plan to Washington. We are all drowning here. Thanks for caring.
Susan
It's about time we hear something about bailing out the taxpaying citizens of this country. The gov't lowering interest rates to 4.5% doesn't do anything to help those on the verge of foreclosure or that are in default because they won't qualify for a refinance becasue of the tightening of the credit market. The people who need the most help have credit scores to low to be able to qualify even if the gov't lowered the interest rate to 1% it wouldn't matter except to the rich who can then just buy up more and more property. Instead of the gov't bailing out big business it needs to bail out the tax paying citizens. GREAT IDEA!!!!!!
I am a young american with a wife and kid. We are currently paying off lots of debt and living paycheck to paycheck. Our mortgage is eating up more than half of our monthly income. If that amount was cut in half my wife and I could afford to pay off our debt save for our daughters college tuition, save for retirement, and spend more quality time as a family. This plan not only saves america financially but has the opportunity to save americas families.
I only hope that the so called CHAGING government makes the drastic changes like this one and stops giving money to people/companies that don't need it.
Good Luck with this and I would love to help if I can.
Wake up America! This plan continues the same foolish economic policies that Greenspan and Wall Street and the home borrower perpetrated upon all of us. If the Federal Government essentially "buys down" 30-year mortgages from their current level to the proposed rate, it is giving away tens of thousands of dollars to each person who takes advantage of the program. What happens to those who have smartly chosen to rent and live within their means? Guess? Who do you suppose will pay for this foolish plan? Duh! We need to have a correction in housing prices so that historical relations ships between income, rents and prices line up. Anything short of this will only kick the can down the road and we will all revisit the pain then.
A deceptively simple idea, clearly born of "out of the box" thinking, that might even work if given a chance. My cynical side, however, reminds me of the outrageous power of the financial and banking lobby. There is no way that they would allow the best congress that money can buy to relinquish their power to the people.
Perhaps a national referendum could force their hand, but we don't have the luxury of the time or the money to pull that off. An out and out revolution might do it though!
To anonymous above"
Please read the article again. No one is "giving" anything to anyone. And we do not "need" to have a deflation push us into a depression. What we need is a plan that will turn the economy around before it is too late. If you have one, let us know.
To Anonymous who wrote this:
"If the Federal Government essentially "buys down" 30-year mortgages from their current level to the proposed rate, it is giving away tens of thousands of dollars to each person who takes advantage of the program. What happens to those who have smartly chosen to rent and live within their means?"
When I first heard rumblings of ideas like this, I thought, "Wow, that would really help me!! What a giveaway." Then I thought again. You know what? I have lost more than 50% of my mortgage to the crooks at the top who manipulated the system. The money was in my employer mandated retirement accounts and in the equity in my home. Giving some of it back this way is reasonablle.
This would be a PARTIAL payback for that and would allow me to take the savings and invest in sensible stuff like a wind generator for my home. HOwever if people take this windfall and buy plastic junk from China, we are screwed.
I don't know if there is any way to avoid the coming depression and I actually hope the hard times will cause Americans to change everything about how they live and return to some decent values. However, those who rented (I've been a renter almost all my life) are not getting screwed by this. If we do not turn the economy around, they will lose their jobs, too. I'm sure something analogous could be done for renters.
I purchased a home just before this downturn. I purchased wisely and my mortgage is totally stable, but if the price of bread goes to $ 20 a loaf, I won't be able to afford to eat. Lowering my mortgage payments would enable my family to pay for utilities and buy food.
The point is: how do we get the money at the bottom where it is needed and will be spent on necessities instead of at the top where it will just be used to further enrich the already obscenely rich? I think bailing out the banks, etc. is hogwash and it doesn't seem to have done a damn bit of good.
You are, like most people, judging the little guy on the bottom who is just a victim and letting the creeps at the top get off scott free. If we can't get the stolen money back, maybe we can redistribute some of the pie. Is this going to be inflationary, probably. Am I afraid of that, yes. But right now we have deflation and that is not so good either.
If you think the people who bought homes on sub-prime mortgages are to blame for this, think again. The banks and financial institutions manipulated the system to enrich themselves. 60% of the people stuck in subprime qualified for prime but were sold a pig in a poke.
Blame Bush for telling people to go out and spend after 9/11. Blame Greenspan for playing games with all this. Blame the deregulators. Blame anyone but the poor guy on the bottom.
And if we do not stop the foreclosures, all our property values will decline and decline. Our towns and cities will deteriorate while people are put out on the street. Keeping people in their homes is the number one priority right now.
As far as I am concerned, people need to understand that the country and the planet has exactly the same wealth it did one year ago. All those homes are real wealth; they are tangible!! The monetary system is totally based on irrational faith. The dollar has no intrinsic value, none at all. Now a home, that is value. Food that is value. Gold. Bah. You can't eat a roomful of gold.
Get over it. Extreme capitalism failed. We need a new system. If we have to go to some mythical bottom to get there, well so be it.
This is the only plan that makes any sense.This plan could also work for small business',with a higher $ cap instead of 500,000 3 to 5 million for business' to buy property at 1.5%(I only need 1.5).I would be able to afford the current property I'm in ,istead I will be closing this store when my lease is up in March 09 adding 6 to 8 more employees to the unemployment list.Wake Up Washington!Put the money in the hands of the people who work 6 to 7days 60 plus hours a week.
database using the web where we can singn in and send this proposal to the senators and the president, with millions of them we might get some eyes open there and have a chance. Now, that will cost money, if Obama was able to get millions using the web why cant't we? I'm willing to give double what I gave to his campain if this is started. My email is mjmenez@netzero.net, I'm wiling to cooperate any way possible. Who else? Let's do it !!!
The beauty of your idea is it's simplicity. Unfortunately politicians do not want simplicity.
This is a great concept, but who is Dennis Paulaha and how come his gmail address is not working.
This is a brilliant idea. My wife and I have very judicially handled our mortgages and make sure that we have never been over commented and make our payments on time and in full. We would like to refinance and do a remodel of our kitchen and utility room. With the current financial situation, we cannot afford nor can we get a refinanced mortgage in order to do our project even with excellent credit. This concept would allow us to do so and purchase several tens of thousands in dollars of appliances, fixtures, flooring, cabinets and other materials. We would also be hiring contractors and others to the installation. See how this thing can easily snowball and immediately get the economy going again.
I will spread the message as much as I can.
THIS WOULD BE A GREAT WAY TO INVEST BACK IN AMERICA---CAR DISCOUNTS, LESS FOR MORTGAGES,
TOO MANY GAINS IN THE PAST FOR FAT WALL STREET, CEO'S OF MAJOR CORPORATIONS WHO ARE OUT OF TOUCH WITH REALITY!
GO WITH IT NOW!!!!!!!!!!!
i agree with your ieda. How can we push this idea up to congress?
I love it! Fantastic idea! I will be sending this link to everyone I know. Maybe there is a chance it could happen if enough of us spread the word.
Our family read this plan together, and all agree this plan appears fair & workable according to our limited economic knowledge. Assisting the people, by starting recovery with the people,utilizes Americans core founding values. By retaining financial independence, our family belices that all countrymen would work hard to rebuild the stability & greatness of our great nation. Our family applauds & appreciates the thought & public effort you have given the USA's very grave situation. Thank you.
This is a GREAT idea. It is simple, straight-forward suggestion. I am disappointed about the facts
- 1)our government is helping greedy businesses. Our Government should do take care of common people by bailing us out !
- 2) Will Government listen to us?
I wish Dennis Paulaha would have ran for president! This is an amazing idea. Hopefully this will reach the White House before it's too late. I am a Realtor, and I can tell you we are on the front lines of this crisis.
Your plan will primarily stimulate the economy if it is used by homeowners to buy better quality homes. Otherwise, if the monthly mortgage savings are spent for consumer goods or gasoline, then this money is lost to foreign countries and to our massive trade imbalance. Furthermore, the lost interest revenue from banks will need to be offset and there will be job losses in the financial markets.
I see the biggest benefit if individuals stick with a monthly mortage that they can afford, but use the low fixed rate to purchase a more solidly built home. In my case, for the same monthly payment at a fixed 1.5% for 30 years, I could buy a home worth $250K more, and this could be for increased craftsmanship, custom cabinetry, energy efficient appliances, landscaping and a host of features that would stimulate America's economy since much of home building cannot be outsourced to offshore suppliers.
The major concern with your plan is that it would drive massive inflation of real estate values.
Open Letter Concerning The Crisis In The Markets-Real Estate, Mortgage, Securities
As someone who has worked in the financial industry since 1986, I feel I have a valid opinion from the perspective of a seasoned practitioner concerning the causes and remedies of the current financial crisis. I work in the real world with real people who have hopes and dreams. I’m in the marketplace dealing with individuals at ground zero every single day. I run three financial businesses concurrently. I am a real estate broker, a mortgage broker, and a financial planner. My career allows me to have great insight into both the problems and the possible solutions to the issues we face today within our complex economy. My hope is that through an understanding of the information presented herein that appropriate and meaningful legislation can be crafted for the betterment of all of society. It is with that goal in mind that I share this information with you today. I’m not a politician. That’s where I need your help.
The financial markets are in upheaval which is possibly leading us into either a recession or a depression. How do we overcome fear and get a REAL stimulus package in place? Are there solutions that are low cost and can be quickly implemented? The answer is a resounding “YES” “YES” “YES”!
Let’s look at five major issues and problems associated with them:
• The current real estate market does not have enough buyers for the current housing inventory. There is a larger supply of homes than buyers to purchase them. Buyers are not motivated. Instead, they are waiting for prices to drop further. They see no end in sight and no reason to take action today. Cities are losing revenue on lower valuations and sellers can’t sell if they ultimately don’t have enough equity to make a move to their next home. We need to put a floor under the valuations of housing so that housing can move forward.
• Loan options have been dramatically reduced. Unless you are a Veteran, there are few options for buyers who lack funds for a down payment. Credit worthy borrowers are unable to buy homes and are forced to remain as renters. Often a rent payment would be equal in cost to that of a mortgage payment. The key is transforming renters into homeowners.
• There is no liquidity in the Jumbo loan market. There are a number of reasons for this. The Jumbo loan market pertains to loans that are larger than $417K. Currently, Jumbo loan underwriting requires borrowers to have larger down payments as well as undergo more stringent qualifying requirements. Larger loans also are charged higher interest rates. In years past, the additional interest rate cost was generally .375-.625% more than with a conforming loan. Conforming loans are loans that are $417K or less. In today’s lending environment, Jumbo loans have a much larger interest rate differential-upwards of 1-2% above conforming rates. This additional interest rate cost is dramatically reducing the demand for these loans and the housing at the upper end of the housing market. Because of this, we are experiencing an even larger drop in valuations associated with higher end home prices. The market values in this price bracket will continue to fall as fewer buyers will be able to qualify or even want to pay the higher interest rates.
• Foreclosures with bankruptcies are increasing. This is occurring because of personal life circumstances and our economy. In many cases, tax laws are not conducive to either pursuing a short sale, selling for less than the mortgage value, or establishing mitigated payments to reduce mortgage debt. Current laws only benefit sellers engaging in a short sale under certain circumstances. From a tax perspective, doing a short sale may cause you to incur a tax liability on the amount of forgiven mortgage debt if you’ve refinanced your home or if the property in question is not your primary residence. Bankruptcy may be the only way to get out from the tax liability on this forgiven debt.
• The stock market is increasingly volatile. Much of the volatility can be attributed to short selling and naked short selling in particular. Short selling involves selling shares that you don’t own, hoping to buy them back later at a lower price. You must borrow these shares in order to sell them short. Current law was changed about 18 months ago to allow you to sell shares short while the price of the stock was falling. This is analogous to throwing gas on a fire. Previously, the law allowed you to sell short only when the stock was moving upward. This is called the uptick rule. By removing the uptick requirement, you’ve unleashed the potential for abuse, as a stock could be sold short as it drops in price, driving it into the ground. Naked short selling involves selling shares that don’t even exist, thereby flooding the market with an inflated inventory of shares at the worst possible time, helping to drive prices lower by creating a huge influx of supply when there is no demand.
Now let’s address solutions to these problems outlined above:
• We NEED to get more buyers into the housing market. HOW can this be done? Bring back seller funded down payment assistance. This allows the seller to provide a gift to a charity which can be equal to the amount of down payment and closing costs. This amount is then given to the buyer from the charity to use as a down payment. In essence the seller funds the buyer costs and the charity was the conduit or pass through entity that delivers the funds. This was extremely useful to borrower’s who could qualify for a loan but lacked the funds to make their purchase. This down payment program arrangement worked with FHA loans and WAS funding 40-50K home sales across the country monthly. When we need more buyers in the market, we never should have removed a program that was working and encouraging home ownership. It was eliminated October 1, 2008 in the last housing reform act bill. Was the program perfect? NO. Could slightly different underwriting guidelines be put in place to make it better? YES. What is the cost to the tax payers? ZERO. Remember the down payment funds came from the seller’s equity. The solution involves fixing the down payment assistance program to make it better, not eliminating this extremely useful program.
• There is a new law that provides a first time buyer tax credit that is repaid over 15 years. This credit expires in June of 2009. A solution would be to make the tax credit permanent. Consider making it better by removing the repayment feature if you stay longer in the home. The credit could be forgiven over time. This would be an enhancement. The cost to tax payer would be VERY LITTLE.
• Bring back 100% financing. We have a model of success-called the VA loan. It has worked extremely well for Veterans since WWII. If you are credit worthy and don’t have a down payment or money for closing costs, you could still be able to make the monthly payment. The programs longevity provides us with a working model. The government could create a similar new loan program for everyone OR allow everyone the opportunity to qualify under VA guidelines. Don’t just limit eligibility to Veterans. The cost to implement this would be ZERO
• Current underwriting guidelines make most people ineligible for a new mortgage loan after a bankruptcy or foreclosure. The current timeline is 1-4 years for a bankruptcy depending on the type of bankruptcy and the specific reason it occurred. The time line from a foreclosure is 2 years if you are a Veteran, otherwise it is generally 4-7 years before it is no longer an underwriting issue on conventional loans. Many of the people who have lost their home would like to be home owners again. By keeping these potential buyers out of the markets longer, the housing inventory will remain high and prices will remain low. Why not change the underwriting guidelines? Instead of 4-7 years, make it 2 years. You could add extra requirements for these borrowers such as tighter underwriting, requiring them to attend mandatory budget counseling classes. They must re-establish a pattern of responsible credit history. This change would bring many people who have been affected by this market back into being homeowners with a stake in our communities. The cost to implement this would be ZERO requiring only a change to the underwriting guidelines.
• Another mortgage solution might involve the government providing a special tax credit or incentive to buy a foreclosed or short sale property. This would stimulate demand for these properties. Instead, when people hear about a bank foreclosure, they immediately sense an opportunity to steal a property and offer less. If we made these properties more desirable, by providing an associated tax credit, we would help shore up the values of foreclosed bank owned homes. This would reduce bank inventory quicker. It would also stop the free fall of values and help the non-distressed homeowners maintain their home equity. The COST would be very little. The exact dollar amount would depend upon the type of monetary incentive which would probably be best delivered through a tax credit to the buyer. Make foreclosure properties more desirable and their prices will firm up within the marketplace.
• The government could also provide down payment and closing cost assistance as either tax credit or under an equity sharing arrangement. Again, the problem for many people is lack of funds not the lack of desire for home ownership. If a typical down payment is 3-10% of a homes purchase price, we could get a lot of homes in the hands of new home owners for very little money. Out of the $700 Billion and other stimulus packages, we ought to be able to find a few dollars for actually stimulating the economy at the ground level. Also, higher incentive amounts could be allocated to certain areas of the country or to communities’ within a state that are undergoing huge amounts of distress and experiencing spiraling devaluation.
• Jumbo loans would be more affordable and desirable if the government was able to underwrite and purchase them under the same terms under which they buy conforming loans. A conforming loan is a conventional loan with a top limit of $417K. Since the government has basically bought the GSE (government sponsored entities) Fannie Mae and Freddie Mac, they can change the authorization limit on the value of the loans they wish to purchase as well as the underwriting guidelines. Increasing the dollar limit so as to include more Jumbo loans has been attempted to some degree in previous stimulus packages. The problem is that they haven’t gone far enough. If the government needs to insure loans over a certain dollar limit, so the rates drop, so be it. We need parity in rates across all mortgage products and a better streamlining of underwriting. I am calling for all loans to be underwritten and priced the same, regardless of loan size. Pricing based on credit and down payment should be the only variables that have an impact. Size of the loan should not matter. If we loosen the higher end home underwriting to mirror that of non jumbo loans, you will help maintain the valuation of larger homes and make them desirable once again. The lack of liquidity in higher end homes is having a very negative affect on values.
• Debt forgiveness laws need to be changed. Forgiven debt shouldn’t be taxed. We need to have other options to work out debt rather than having bankruptcy as the only option to get out from the tax liability associated with both credit card and mortgage liability. The credit card industry is clamoring for this change. The credit card crisis is upon us. We need to get out in front of the problem. No longer can people refinance and use their home equity as a way to pay off their bills. If you incentivize people to work out their financial problems affordably, many will choose to work it out. If the only option you present, because of tax liability, is a bankruptcy and/or foreclosure, then they will choose that option. Increased foreclosures only compound our housing crisis. Cost is ZERO. Legislation may actually increase revenue as people pay something instead of nothing.
• Allowing short selling to continue, without bringing back the uptick rule is unconscionable. In my opinion, elimination of the uptick rule was one of the major causes of our stock market meltdown. Bringing back the uptick rule and eliminating naked short selling will restore value and trust to the markets. Without both, you have all the ingredients for distortion and manipulation of stock prices. You need look no further than from the time the law was changed to the present for the proof. Unless we restore confidence to the investment marketplace, we risk a protracted and weakened capitalistic society. Investing in the markets is what helps create capital and jobs. Cost is ZERO. Bringing the uptick rule back and enforcing the short sale rules that are on the books dealing with these abuses will restore confidence in the markets.
These are my solutions to the major problems we are facing today. If you need clarification about any of the problems and solutions I’ve proposed I would welcome a phone call and the opportunity to discuss this with you further.
Sincerely,
John Mazzara
http://www.minneapolisstpaulhomes.com
The real value in this idea is the job creation. Currently in the United States alone there are millions of out of work REALTORS, Mortgage Brokers, Home Inspectors, Title Agents, Craftsmen and Tradesmen, Interior Decorators, Insurance Agents, Builders and Developers and all of the associated laborers within those industries. A plan of this nature would put those people back to work.
I am in full support of this idea and will continue to support it and work diligently towards making it a reality. You can, too! Simply Email the link to everyone on your email list. Spreading the word is extremely helpful.
Jeffrey J. Evans
Denver, CO
Great Idea!Also:1. How about reducing the interest and fees credit card co. and paycheck lenders charge, and no changes in contracts midstream. 2. Teach school kids how to budget, handle and respect money.3. Legislate understandable, predictable, straightforward and public credit score guidlines--now it's like keeping score for rollerderby !
I have been thinking about this plan for more than a month now and I have not been able to punch any holes in it, and as my wife will tell you I am a hole puncher.
have you been getting any feed back from our government on this since they would be the ones needed to implement this plan?
or did I just find a hole?
Richmond in Charlotte, NC.
FWIW - Part of what Andrew Jackson said in 1832 from Veto of the Bank
Bill;
"It is to be regretted that the rich and powerful too often bend the acts of government to their selfish purposes. Distinctions in society will always exist under every just government. Equality of talents, of education, or of wealth can not be produced by human institutions. In the full enjoyment of the gifts of Heaven and the fruits of superior industry, economy, and virtue, every man is equally entitled to protection by law; but when the laws undertake to add to these natural and just advantages artificial distinctions, to grant titles, gratuities, and exclusive privileges, to make the rich richer and the potent more powerful, the humble members of society-the farmers, mechanics, and laborers-who have neither the time nor the means of securing like favors to themselves, have a right to complain of the injustice of their Government."
For the hard working honest people this would be a Superior Way to attempted to resolve the current finical issues in the USA.
BUT..as Jackson said;
"the rich and powerful too often bend the acts of government to their selfish purposes"
I do not think we the hard working honest people would see this no matter how we "complain of the injustice to our Government."
Look at the 10's of millions of dollars that where spent on lobbyist by the Bank's for "THIER" Money Grab{TARP Money, a tarp is to cover thing's]
Has any of that "money" helped the hard working honest people?
AS A MORTGAGE PROFESSIONAL, THIS IS VERY CREATIVE AND EFFECTIVE. IN FACT YOU WOULD ONLY NEED 3%,A MORATORIUM ON FORECLOSURES FOR 5 YEARS AND A PRINCIPLE REDUCTION TO CURRENT VALUES TO MAKE THIS WORK.AND, WITH THE GOV'T NOW BORROWING AT 1/2% OR LESS IT WOULD BE A DROP IN THE BUCKET. BUT..POLITICS WON'T ALLOW IT, THEY WANT TO PAY PEOPLE TO GIVE OUT THE MONEY ! THAT'S WERE THE ALMIGHTY PATRONAGE ALWAYS COMES IN. HELL, IT WOULD ALSO BE CHEAPER TO JUST GIVE EVERY CITIZEN $ 500,000 AND LEAVE IT THERE, WHEN YOUR TALKING ABOUT A TRILLION DOLLARS IN GIVE AWAYS TO ALL THOSE PEOPLE AND COMPANIES WHO ALREADY HAVE PENSIONS AND HEALTH CARE....WHAT ABOUT THE SELF EMPLOYED WHO PAY FICA AND STATE TAXES BUT WHO CAN'T EVEN GET UNEMPLOYMENT UNDER OUR LAWS ?! OR THE CHECKOUT PERSON WHO'S NOT " UNIONIZED " AND WON'T GET A DIME !! THESE ARE REAL ILLS THAT NEED TO BE CORRECTED AT THE SAME TIME THAT WERE TRING TO SAVE HOMES.
DEANO.
I, too, like the simplicity of the program - Although I do know that it may dead on arrival because of the by-passing of financial institutions, putting the money back into consumers hands (both prudent and not-so-prudent homeowners) will stimulate the economy MORE than just dropping billions onto the balance sheet of our leading institutions. All that does is encourage these companies to look for a competitive edge as they still have to answer to stockholders - let's get some money in the CONSUMER'S hands to drive the economy - HOPEFULLY, the savings on housing costs would generate some thrift among households as well.
I agree completely! How wonderful this would be! The government really needs to invest in the citizens.
I think your plan is a great idea. I have posted a link to your blog at my blog, 'Hands for Man' http://handsforman.blogspot.com/
Hopefully it will lead some more people to support your great idea!
Who would have to gain by not implementing this bailout? Seems to me that if I could save every month, I could start my own company with the cashflow.
Who would not gain from this plan? I would use the cashflow to start my own soybean supplement brand and create a truly good product and other work.
A few "holes"?
First
Anybody remember inflation?
Where does the actual money come from? Think of pre-WWI Germany and their printing of money like crazy.It became so devalued people were using it as wallpaper. This would dwarf that.
Second
Who is in charge of determining the qualifications of the borrower to repay the loan? Would we not have some of the same people defaulting again? While the number of these "re-defaulters" would be less, the dollar amount per default would most likely be higher with the government(taxpayers)now on the hook for every dime instead of the banks, lending institutions & consumers that made the poor loans.
Third
While we may think of banks as greedy, what will happen to the millions of bank employees and bank related businesses that won't have any customers when the public no longer goes to the bank for a loan? Why would I go borrow $500k from a bank at 6% when the government offers it at 1.5%?
Think of all the jobs lost not just at GM but for the support industries too. Also, to service these loans & the program, think of how big government will get. Who will pay their salaries? Taxpayers that's who.
While the offered plan is a new approach and has some strong merits, I wonder if it is not just another way of kicking the problem down the road until it rears its ugly head again 100 times worse?
Our version of capitalism appears to be unable to function without some form credit.Too much instant gratification got us to this point.
Too much government involvement proposed here? Unemployment, Social Security, Welfare, Medicare, FHA,VA, subsidies etc etc., and now the government (taxpayers) will own your home too? Are we now not one of the most socialist country in the world already?
I still want to live here rather than anywhere else- more hope here.
The government money taken to line the pockets of the bankers and their families ought to be considered as stolen, and they ought to be prosecuted/white collar crimes. The plan on this page would help boost the failing retail price of my home and allow me to keep it up. So, where is the justice department of the government?
No one is going to help the average American. The only answer is a revolution... Wall street owns Washington and they don't give a **** about the average, hardworking American that is suffering everyday. Obama got my vote, I'm still waiting to hear what he is going to do for me.
HOW AND WHEN THIS WILL BE PASS ON TO THE OBAMA ADMINISTRATION.....SO SIMPLY AND IT SHOULD BE CHANNEL ONLY TO THE AMERICAN WHO PAY TAXES TO STREAM LINE SUCH IDEA..TO HAVE OVERSITE AND CONTROL..ECONOMY WILL BE UP AND ROLLING IN ONE WEEK.
PLEASE DO UR BEST TO GET THIS THROUGH TO THE FLOOR AND CONGRESS
GREAT IDEA
This news came on Yahoo.com today with the heading "Obama promises lower mortgage costs, new loans" (click below link)
http://news.yahoo.com/s/ap/20090131/ap_on_go_pr_wh/obama_economy
Please send this link to everyone, including your senators. Please go to thier website and email them. Spread the news!Please use some of the below websites to contact your elected officials. Send them this blog link. Also, send it to the Media.
www.senate.gov/contacting/index.cfm
www.house.gov/writerep/
http://answercenter.barackobama.com/cgi-bin/barackobama.cfg/php/enduser/ask.php
http://change.gov/page/s/yourvision
THIS SOUNDS LIKE SOMETHING THAT JUST REALLY MIGHT WORK. I AM SURE THEY WOULD HAVE TO PUT SOME TIME LIMITS TO IT. I LOOK FORWARD TO SEE WHAT COULD HAPPEN.
SINCERELY,
LISA STEPHENSON
According to your entry 1/31/09) on-line "New York Times" announced, "Obama Pledges Help on Mortgages." and "President Barack Obama on Saturday promised to lower mortgage costs...
He is pledging and promising but when will we see the results really?
The Republican response was that they want to see government-backed 4% mortgages for all qualified buyers.
So does this mean their opposition with put out the flame that has begun?
Thank you for your time.
Do you have any other thoughts Dr. Paulaha? Perhaps the economists that have read this have alterior motives for not helping the average hard working americans or their neighbors. Can the president truly turn the economy around without the plan that you have spoken of? After listening to all the sweet words from the President address and hearing of the plans, I have seen nothing that comes close to promoting recovery from the depression (and job sucking NAFTA agreement,) as your plan could reverse and in a weekend.
I fear leading (our leader's ) economists at Harvard whose actions with the previous administration who cause and effect created this depression, would burn at the thought of some outsider, such as Doctor Paulaha's plan. That he could have the answer to the economic woes, thus, it could unravel many an economist and banker and republican.?! To hear republicans answer charges one would think they have a failure to learn from the mistakes made. Gov't cant solve the problem, Gov't is the problem should have sent up a RED FLAG. It is the premise of the founding fathers that Government of by and for the people not the high tax bracket. Where are the outraged people? And, the outraged media? All gone with the wind.
Let us all reread the 1984, and Animal Farm by Orwell.
This plan should have been the entire so called Stimulus program. It is too somple and makes too much sense! I sent this to my two Senatores (both Democrats) and my RAepulican congressman. Sen Prior responded with a long litney of how the Dems were going to socialize us, Sen Lincoln did'nt even have the manners to respond at all. My congressman did not even understand this concept at all! Yet this congress passed the stimulus bill without even reading it! No one in their right minds or with any sanity could have voted for this wasteful mess.Give us strength!!
This plan should have been the entire so called Stimulus program. It is too somple and makes too much sense! I sent this to my two Senatores (both Democrats) and my RAepulican congressman. Sen Prior responded with a long litney of how the Dems were going to socialize us, Sen Lincoln did'nt even have the manners to respond at all. My congressman did not even understand this concept at all! Yet this congress passed the stimulus bill without even reading it! No one in their right minds or with any sanity could have voted for this wasteful mess.Give us strength!!
The plan won't work as it puts the burden on taxpayers, the same as TARP and deletes WALL Street. We, are a capitalist country, let capitalism prevail. The profits and losses is capitalism, not the profits for the elite and the losses for the masses.
Needed a government mandate that enforces a recall, reduction to appraised value and a replacement mortgage issued for all defective mortgages with the banks/investor taking the loss, not the taxpayers. A mortgage is defective if it has a UNSECURED personal loan attached to a secured lien, called negative equity.
Negative equity is created when homes (REO's) in the area are sold under the "market value" lowering the value of an area by their recent "comps" intentionally financially harming existing customers.
1- underwater and current, new mortgage issued at appraised value with the suggested interest rate of 5%, no income or ratio's used. This group is a good credit risk, and it eliminates moral hazard entirely
2- underwater and delinquent, new mortgage issued at appraised value with the suggested rate of 6%, subject to sufficent income ratios of 33/41%. Eliminates homeowners who "overbought"
3- Current but needs a lower rate, new mortgage issued at up to current appraised value at 4%, no income or ratios used.
4- New homebuyers are eligible for a 4% fixed rate subject to normal underwriting guidelines.
Basic rules:
1- owner occupied
2-citizen or resident alien
3- New mortgage payment must be lower than current payment
4-appraisal must include 2 REO comparables to show a true appraised value.
5-bank/investor will be allowed to take up to 3x the dollar loss for tax/balance sheet purposes at time of refinance
6-no further discounting allowed lowering values further
The total loss to the industry is 1.2 Trillion Dollars. (appr.12 Trillion Dollars in outstanding mortgages, with 25% of them having or near negative equity, if a 40% principal reduction had to be GIVEN to EVERY homeowner to reach appraised value, the total loss is 1.2 Trillion dollars to be shared by ALL )
It certainly is a lot less than the 9 TRillion Dollars we already spent, outlaid or promised to the financial sector without correcting a single defective mortgage.
The problem with the above proposal which I sent to every senator back in 9/08 is it takes away the "revenue" from the 16% or so of paying customers that are also underwater from WALL STREET, and forces them to correct their own mistakes.
Question: if you knew that your "father/mother/brother/sister(government)" was going to pay for your mistakes, why would you(banks)?
Take away all taxpayers funds, and enforce the mandate protecting consumers while remaining capitalist, the banks will comply.
Great idea! Unfortunate that it probably won't come to anything in any of our lifetimes. I fully believe that the answer to this nation's dilemma is JOBS. A person has to have a goal to work for,and the HOME is most American's dream. This country has to become self-sufficient, producing to meet it's own needs as best it can. Only jobs in America can produce the wealth needed to implement this or any other plan to rebuild the strength and power and prestige of this nation. We have to realize that improving the standard of living of the rest of the world is putting our's into decay. There is only one thing that each of us can do as equals to change the situation as it exists-VOTE-and encourage others to follow your lead. POWER TO THE PEOPLE---TAKE OUR GOVERMENT BACK!
One year later, the brilliance of this proposal is even more obvious!
Of course that is the exact reason why it will never happen: it's simple, powerful and would work.
No politician would ever subscribe to that, would they?
A concerned, yet highly jaded citizen in the Pacific North West.
If we continue, and that is a grave question, the corruption in Washington, if the average american really knew what was going on, they, would leave the country. For parents whose only care is for the welfare of their children and the next generation, who would not want a brighter future? China owns us. LBJ was the one most to benefit from Kennedy's demise. And the Bush, with their concealed weapon law, advocating such nonsense, had all to gain, by the bomb planted in the glove compartment of the airplane, which the eyewitness said he heard explode overhead, causing him to run out the door to see the Wellstone plane smash into the hill. The eyewitness still alive, i suppose. But, the Head airplane mechanic for NWA attests to the plane being so tight, so tight, that the only thing that could explode is a bomb. The plane being so tight, the only place to put a bomb, in the plane is in place of the blackbox, which is in the glove compartment. A switch was made. And, while GW was reading to kids in the Rochester grade school. The paid assasins assured Mrs. W that this was a funeral of a friend She and Mr. Wellstone had to go. Unknown to her that is was their own. And the coverup was complete. And the MM (MONDALE AND MOE) ticket amounted to feeding the American Public M&M's.By trashing Wellstone they cleared the way for preemptive war.The GWB et al going to war without due process of congressional approval, and spending all our money on killing spree.
The Remortgageing America might save a novel few lucky americans and am all for it, and plan to tell my congressman.
Till we lynch Mr. GWB, and Cheney, the due process of all the president's men, shall have to wait. And i will not be holding my breath for either ideas that made a sweet reasonable sense.
Obama does not have a clue to solve your financial problems. The best remortage calculator is available on Remortage Home
nice posting
So, they force lend the money to the banks at a high rate of interest,and don't allow them to lend it out to businesses or individuals, and won't allow them to pay it back until they feel the economy is good.How does this help? This is after they forced the banks to make the subprime loans in the first place. This is a planned government created problem with a planned government solution. You guess who losses. I love this mortgage idea, They could have used Fanny and Freddy to implement it....Where is the money now?
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It sounds like a good idea. What are your fellow economists saying about this? If you want to make this really happen, convince your colleagues. A "school of thought" might be more powerful.
Excellent I dea. I hope majority of Americans could see the urgency of this proposed solution to our current and future problems. I could not see other viable alternatives except this one. Please continue the struggle I /we are behind you!,,,,, thanks
Jdr
i cant find a place on web page to vote yes on mortage refinance eugeneluke@comcast.net
I believe that the remortgage america plan is the answer to those of us that have strugled to get ahead in this country. As a Vietnam veteran even with the GI bill I could not afford a mortgage because of all the rules and regulations and exceptions it has. I pay rent because my government does not really take care of the people that have served in the arm forces. As you could see by the number of Gi's that are coming back from war, about 10% or more are without work or living in subhuman conditions. We need to really push this plan and similar others to get us back to our golden age in this country, the 50's thru the 70's, where people did have money to spend and our country was not so involved in giving things away so readilly as we do now to other countries that really do not help us in our economy. Mr. Obama we voted for you because of all the good things you promised this country and yet you only have taken care of the rich banks and their needs. It is our time to shine, please give us this opportunity to turn this country around. We can do it together.
Please remove the comment by the person proposing a 20% discount on cars selling for over $30K. Perhaps it was said tongue in cheek. The remortgage proposal
makes financial & economic sense and should be seriously considered. It is a first mover proposal that can lead to further positive initiatives.
Great idea. Goes along with the same idea I had about the government giving the people a bailout instead of the banks. If the government had given the people only half of what the banks and auto industries got we could have paid our mortgages, bought new cars, income taxes would have been paid, we could afford to send our kids to school ,jobs saved etc....to late for that now. Hope your plan catches on. Something needs to be done.
You need a Facebook page!
The American dream of owning a house was taken from greedy banks and investments companies with the promises of making you feel "rich " that worked for them!! The average house is run down and is not worth what the banks gave the homeowner,that dream is a nightmare for most and a plan like this needs consideration.
This makes to much sense. Our elected officals would never have come up with this. It's a win win plan for all except our greety financial institutions. Washington needs to get this message loud and clear. All my friends will hear about this. I'm saving the newspaper add. I would drop the auto plan though.
Beautiful. Brilliant. I just spent the last half-hour writing to my senators, my representative, the president and my newspaper about this. We should all do it. This is the format I used:
Dear President Obama:
Here's an idea to help the economy from RemortgageAmerica.com:
Lower ALL mortgages to 1% for 2 years for ALL homeowners. It would stop the slide of foreclosures, stop the drop of housing prices and stimulate the ecomomy. It's a win-win: The banks stop foreclosing on homeowners; homeowners stop losing their homes and the economy in two years will finally start recoverying. The only question is: Does anyone in Washington have the courage to do it?
good lets try it.
good lets try it it can't
be all that bad.
yes I agree with the plan. On a $450,000 loan at 1% interest I would save about $1,500 a month. Save $500 and spend the other $1,000 to help stir the economy. buy more products and you'll have to hire more workers to make the products, etc.
I can't understand how a government with NO MONEY can buy up all the existing loans and houses at current interest rates of 4-8% or more, and then refinance then at 1%. While you state the "Government" may have to go into debt for 10 to 15 TRILLION dollars it's not a debt becasue the "lons will be repaid". We already OWE 15 Trillion dollars we can't pay off in natioan Debt and you think going another 15 trillon into debt on top of that will solve the problem..What happens when the people spend money on more CRAP made in China, not at home? We don't create jobs, whichis at the root of the problem.
I don't know where you received your Ph. D. but you should go ask for your money back. Oh I forgot, you probably used a "Government Loan" to get it in the first place.
As a person with a Ph. D. in economics the first lesson learned by anyone in busines is that.."The big fish eats the little fish!" Apparently you and the government forgot this basis premise. No loans, no bailout, buy out your competition at .10 on the dollar.
The same people that don't pay mortgages now won't pay them later, not without a job!
Get the government out of business. It doesn't ever make money it only takes money..
There is No Free Lunch.
Do we want more Taxes? More Street Camera? More School shutdowns? More Layoff? Stiffer Fines? More Tickets?
Do we want more increse in Food Prices? In Gas prices? In Rent? More Gouvernment Bickering?
OR DO WE WANT TO HEAL OUR ECONOMY?
The gouvernment failed to come up with a plan. LETS GIVE THEM ONE. I VOTE YES BEHIND THE PLAN FOR AMERICA TO SAVE HOMES, CREATE JOBS, AND ELIMINATE DEDT.
Why do it through the national gov. why not leave it to the states to deal with the mortgage problem?
Leave it to thne individual to save and spend; we should not all help home buyers, rent, not own, I always say, unless you can afford it.
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