What America can do to avoid a depression

What America can do to avoid a depression

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.

(visit the link for the full news article)

I personally think this is awesome idea.
I am not a PhD in economics so I do not know if this is actually feasable?

If it is sign me up and lets get this to our representatives!

Speak up people! Imagine what it would be like if we only pay what our homes are worth and not pay a greedy bank a 6-8% annual rate?

We'd be investing in our selves and future generations.. no?

remortgageamerica.blogspot.com
(visit the link for the full news article)

that is still slavery

I suggest watching the Esoteric Agenda to enlighten oneself.

Hanging all the corrupt politicans and bankers would be a start...

two lines

reply to post by gormly


It would help but it would not fix it. The problem is that the banks will still front load the interest so that people are paying virtually interest only for the few 5 plus years. Then, when that 5 year window approaches they will push the people to 'refi' or 'consolidate their debt' thus restarting the front loaded interest payments.

So yeah, the payments would be lower but the equity will still not build up. However, if people are smart and stick to their guns it would be a boon.

However, staiving off a prolonged recession? Don't think it will help now. We are too deep for too long as it is. It's on the true string pullers to decide when we come out of this recession now. After they have blackmailed the lawmakers into giving them every ounce of blood that us people can give up.

Hmmmm....
I like the ideas about where to start...

But, I highly doubt that there is anything that US.gov can do...As a matter of fact and history, the more that .gov tries to do, the deeper and more prolonged the pain..

If I were a conspiracy theorist...ummm...I would say that this is beginning to look intentional...

At any rate, as uncomfortable and tragic as it may be, it is necessary, and what is left of these United States will come out of this much stronger and wiser.....eventually

What Great idea! something for the people, not the higher ups! We have been trying to sell our house for two years now, and have lost 25% of the value to our home. Please make sure everyone hears about this.

This is actually a great idea. Only problem is that we have to issue debt in order to fund such an undertaking. While short term treasury rates are at 0, a 30 year term would command for at least 3%. In order to do this we would have to be able to create and print our own money. Then it would be the perfect solution.

The goverment would buy every primary home mortgage (by decree) at full loan value, including all pooled mortgages and credit lines. They would refinance them under this program at full loan value and would also originate all new primary mortgages. If you don't need help you just get to pay 1.5% equivelant payments on your original loan schedule. If you can't afford the new payment, which would basically be half of the old, then you lose the house. Everyone would get a chance before this happened as everyone would qualify automatically for the refinance and given a bit of time(3 months) to start to paying. New originations would require proving creditworthiness.

For reference the payment on a 30 year $200,000 1.5% loan would be $690 a month. $440 actually goes toward principal the first month. If you currently are paying 6.5% on a $200,000 your payments are around $1250 with less then $200 going to principal in the first payment.. This is a substantial difference and would pretty much save most homeowners. If someone couldn't pay even this lower payment, then there really is no helping them. At these rates the resale of the home would do quite well as house values would be put right where they were a few years ago. Some type of cap would have to be out on these loans giving the goverment much of any profit if the property is resold which would discourage wholesale house price inflation past the levels of the last bubble.

This would stop the foreclosures. It would give homeowners and renters more money to spend in the rest of the economy. It would allow the banks to get full value for their loans. It would also allow them to raise funds to repay the bailout loans. They would also have much improved leverage ratios allowing for a smooth transition to higher reserve requirements. The feared derivative meltdown would never happen although the banks with teh worst practices would probably still go under, but with little effect on the economy.

Banks would be out of the loop on making profits on future primary home loans, except if they choose to act as a processor for a fixed fee. They would still be free to make loans on virtually anything else. Basically all they are doing now is taking goverment money at low rates and relending it to us at much higher rates. Lets cut out the middleman and cut the risk of these events reoccuring in the future. Alternatively they could do a 4% mortgage for 90% of current value and have the same effect.

What a great idea!!!
How can we get it done and not let a good idea die for lack of support?
What are potential downsides?
irancontra

Excellent, excellent idea! Since "we the people" are actually bailing out the companies, why not bail ourselves out?

It will help out those 1. who are in trouble of losing their houses, 2. those who are not having trouble paying their mortgages but have misgivings about the "govt" bailout of companies who made bad decisions, and 3. those who bought houses in last 3 years which have drastically lost value, and have the potential of losing them in the future because of loss of income from stock market and loss of jobs.

Where can I sign up?

Basic rules to help people evaluate things like this.

1) Follow the money. Who is paying for a full page ad in USA Today? Probably not someone with philanthropic intent. More like a mortgage broker planning to make money on the refinances.

2) Follow the money. What happens to those who invested in mortgages or securities backed by mortgages at 7% when their entire portfolio or investment refinances over night. Probably unlikely to hire people, reinvest in job creating ventures, or...well survive.

3) Follow the money. Where is the government getting the money to make these loans. (Think, TAX or its counter part, "Print More Money" - well, duh).

4) There is no such thing as a free lunch. OK--this could be Follow the Money, but seriously. Does anyone think that a problem that has been germinating since the Carter administration will be fixed with no pain?

reply to post by gormly


great idea,makes sense lets go for it. after all corporate america out sourced our jobs which is which has cut into our tax base for their profit. why should they be bailed out and the middle class holding the bag. i say middle class first millionaires last for the bail out. thanks.

reply to post by Solomons

reply to post by gormly


My father inlaw saw your ad in the paper and asked if I wrote it. You are right on in your thinking but big brother will not do this for it would make too much sense and it would take the money away from the rich. They do not want to see the average person on even ground Kenneth Gifford

reply to post by gormly


What an awesome idea! Imagine how fast the consumer spending would bounce back, housing starts would begin again, people would buy new cars, and the government bailouts could actually have a meaningful impact on mainstream America. I hope this idea gets in front of our elected officials and has a chance to get some traction! Keep it going Dennis

reply to post by gormly
I read the article in USA Today and LOVE the whole idea. And why wouldn't it work? We seem to bailing out everyone and this is chance to bail us out. I love it. I would love to first in line to keep the house I am struggling with right now. Where do I sign up?

reply to post by gormly


This plan will never fly - it makes too much COMMON SENSE

How would that stop a depression ,you could sell houses for 10 bucks,but if no one has any money how could or would that have any bearing on the economy,believe it or not not everyone in the US is a home owner

i agree with the idea as it does put the money so to speak in thehands of the people instead of the fat cat financials or corporate money grabbers .the people will most assuradly spend any excesses they have witch in turn will jump start the economy.besides being able to afford their houses they vehicles ,education ,stability in their lives . by bailing out banks and auto companies ther will not be the control of the results even though there are "guidelines" set ,they believe me will find loopholes to go back their faulty business practices that brought about this mess to begin with . further more the lack of regulation that greenspan and the bushwacker wanted was one of the main problems also . if it can be gotten away with it will happen !!!!northwoods