The answer to our mortgage problems

I put this idea up on various threads but it never got discussed like it should have. What problems do you see from this idea? How do you make it better? Do you think it can work? What will be the unexpected consequences of doing such a program? Idea below:

Piece-mealing the mortgage issue on a local basis is a start but it will take a national effort to make any headway toward fixing the mess. I have the solution, but it carries the problem that investors will no longer be able to earn a profit on these mortgages. However, they will get their money back they ahve invested. My belief is that MERS and the whole securitization process was outside the established law rendering all these mortgages invalid, thus this is also the fairest solution.

Have the FHA(or something similar) buy every mortgage for every primary residential property in the country for the full amount of principal owed. Then do automatic refinancing with zero underwriting standards. Principal is reduced on all mortgages relative to the amount of time until paid off at the rate of one percent per year. Thus if you still have 15 years left you get a 15% principal reduction. 10 years, 10% and so on. You also get the option or refinancing to a 30 year term where you get 30% principal reduction. Such a program would pay for itself. For example: I owe $300,000 on my mortgage. FHA entity would pay the investors $300,000 and refinance the loan with me for 30 years with principal reduced to $210,000. Over the 30 year period the FHA entity would get repaid $360,000 at 4%. This would easily cover their initial outlay plus the cost of servicing the loans and the eventual defaults. Make the mortgage stay with the property so after resale the FHA entity still gets their money back. Some people still won't be able to pay and they will lose their house. However, if you face losing your house, you still get the principal reduction and the buyers are forced to accept the FHA refinance or buy out of it. Thus you have a shot at getting out with some cash in hand to start over. Remember, this costs taxpayers nothing.

This would save most American households a couple hundred bucks per month. It would allow many folks currently underwater a chance to move on if they desired. It would immediately prop up the housing market as lower payments allow homeowners to spend more for the house. It would allow for more savings and more spending which equals a better economy and more jobs. It would eliminate the courts proceedings and backlogs and get the banks out of a serious legal issue.

Thereafter, have the social security fund make these loans and keep the banks and investors out of the primary mortgage business. They will still have second homes and commerical properties to loan on, as these are business endeavors where the parties must look out for themsleves. Do banks and investors really deserve to take a few hundred bucks a month from every homeowner in America? In my opinion they don't and our government needs to ensure that they can't.

This is my answer. If you think it will work, forward it to someone who may be able to make it happen. Feel free to make changes as you see fit.

If it doesn't cost taxpayers money where does FHA get the money from...for all the upfront cost?

I'm a bit bitter about the housing "crisis"..we purchased what we could afford..NOT what we wanted because the jones' had it. Why should I feel bad for all the people who bit off more than they could chew? Sorry Charlie.

reply to post by Neopan100


We create the dollars for the program. It can be done with a few computer strokes. By eliminating the derivatives and leverage in the system, the money creation will not be inflationary. It will likely collapse the leverage of some banks, but lets get real, if your customers paying off their loans makes you go bankrupt, things probably aren't as they should be to start with.

Your selfish attitude will get you nowhere. How do you feel about declaring every MERS mortgage invalid because every one of them broke current mortgage law? Or should we as Americans just forget about the law and justice and just bend over to keep the banks in business? I think my proposal is a good middle ground but you would rsther continue to pay hundreds of dollars to the folks who created money out of thin air for your mortgage. This country is screwed!

uuuuuh There's only one problem with your idea.
As mentioned, where do we get the cash from?
In 2008 the sum total of all mortgages was . . . . wait for it . . .
25 trillion dollars!
You can't do that with a couple of computer strokes.

Uhm... Hmmm... how does this:

Originally posted by sligtlyskeptical
I think my proposal is a good middle ground but you would rsther continue to pay hundreds of dollars to the folks who created money out of thin air for your mortgage. This country is screwed!

gel with this:

Originally posted by sligtlyskeptical
We create the dollars for the program. It can be done with a few computer strokes.

You're saying "I hate hotdogs, they're made from garbage." when somebody offers you a hotdog, then walking over to your grill and shouting "OK kids, who wants hotdogs?"

Personally, I'd rather pay for myself and my own NOT pay for somebody else's irresponsible stupidity. This is just another example of the benefits of not fiddling with capitalism. It worked wonderfully in America... until we started creating benefits for folks who wanted to game the system or sandbag their way through life, then it essentially became Frankenstein monster of capitalism and socialism, a sort of Capisocitalism, if you will. Ideas like the above simply stitch a couple more bastardized body parts onto the monster and send him back out the lab door in hopes that he stops killing the villagers.

That is like trying to put out a fire with gasoline.

If you sign one promisory note you had better make sure that the other one is returned to you.
Otherwise you may be reaffirming a debt that you may not owe if the note has been lost through the robosigning and MERS system.

Originally posted by samkentIn 2008 the sum total of all mortgages was . . . . wait for it . . .
25 trillion dollars!
You can't do that with a couple of computer strokes.

How many of those mortgages are duplicates same property that has been refinanced, sold, or whatever and the mortgages are still being traded as though they were real.?

What is the total value of the land upon which the mortgages are based?