There Are 5 Responses So Far. »

1. 

   Comment by John Watch on 15 July 2009:

   If someone can pay rent, that rent can be considered part of a mortgage payment. The government is providing $8,000 for first time buyers, so why can’t the government pay part of the payment and have the borrower repay the government in the future?? Here is an example of how it could work.

   • Mr. and Mrs. ZZZZZ have a mortgage payment of $1,170 ($200,000 loan with 30 year payout at 5.75% interest).
   • The ZZZZ’s lose their job and can only pay $470, so the government pays the difference of $700
   • So the ZZZZ’s remain homeowners and work through their problem. It takes the ZZZZ’s 10 months to get back on their feet, the government paid out $7,000 and now the ZZZZ’s owe the government.
   • But the government says okay, you can start paying us back in seven years and the payment will be over 10 years at an interest rate of 3%.

   What the government has done is to provide assistance to the property owner (just like the bailout plans for the Financial Industry and Automotive Industry) and requires them to pay back the obligation starting in seven years. This is not a freebie, but short term assistance. Franklin Roosevelt called it Lend Lease.

   This program is not perfect, but it can assist a lot of people who want to own homes. Most importantly, it is channeled directly to the property owner, not a large corporation that has other motives besides keeping the property owner solvent.
   A significant benefit of this program is that payments to financial institutions will resume and cash flow will get back to normal levels, thus credit availability should improve.

   There needs to be conditions such as confirming gross income via income tax statements; confirming employment and confirming current payroll. The only group of individuals who would be excluded are those who own more than one property (there should be no break to the investor who treated real estate as a business) and cases where mortgage fraud exists in the form of straw buyers and invalid sales (properties that sold more than three times within five years and the value change was greater than 150%).

   This total assistance would be capped at $50,000 and could run for 24 to 36 months
   In a given year up to $25,000 could be provided.
   The government would be releasing the funds over 12 months, thus the federal outlay would be limited.
   The total cost of $10 million loans receiving assistance would be $250 billion per year or $500 billion in total.
   This is much cheaper than the TARP bailout and part of this can be funded with the current $70 billion in TARP repayments.
   The greatest difficulty in implementing this program is processing and accounting. Loan Servicing companies would need to add staff (if one servicer can process 50 applications a week, 4,000 servicers would need to be hired, plus additional support staff) Wow, as many as 10,000 new jobs would be created. Add to this job creation the fact that several million homes do not go into foreclosure and more jobs are not lost due to desperate situations.

   Yes it is possible and yes it can work.

   The reason it can work is because real estate goes through cycles. If people are forced to sell at liquidation prices, everyone loses. Give property owners a chance to get back on their feet, get back to work and the whole economy starts to turn around.

   As stated earlier, this is not perfect and many will complain about the injustice. But think about the injustice of the corporate bailouts, the injustice that first time home buyers get a break, the injustice that shareholders come before the individuals who created value in the companies by buying products. One can go on and on, or we can try.

   We only fail if we do not try.
2. 

   Comment by M Realty on 15 July 2009:

   I agree, they have done enough repair to the economy, and they need to wait for things to start turning right, which takes time. If they continue to play with the economy with short sighted solutions, they are just going to waste time and money. Nancy Pelosi should resign, she has no good ideas.

   -Tyler
3. 

   Comment by kathy on 16 July 2009:

   Amen to Nancy Pelosi resigning. This administration is encouraging
   a dependent society that will lean on government to bail them out of any mistakes. Government is now a enabling parent and we all know how that ends
4. 

   Comment by Austin Apartment Pro on 18 July 2009:

   What an asinine idea. What ever happened to personal responsibility in this country? I feel for homeowners who are losing their homes but there is simply no way to spend more tax dollars on this problem without essentially flushing them down the drain. So the government takes over your mortgage, you tell them how much rent you can pay until you get back on your feet and then you pay back the difference plus interest to Uncle Sam. Okay, so what if I choose to live in the house and pay 60% of my mortgage as rent to the government for two years and then I just walk away anyway because the house is still worth 20% less than I paid? Oh, I forgot that there will be a government agency created with truth detectors to tell the honest homeowners who really want to keep their home from those who might later change their mind.
5. 

   Comment by Gasman on 10 October 2009:

   Hey Austin,

   Let me guess. You are in favor of continuing to give Wall Street, Corporate America and others billions of tax payer dollars, not not your next door neighbor. Yeah, that right, lets continue to give monies to the bankers so they can continue to pull figures out of thin and state that they are helping homeowners and providing modifications. Please, lets get our heads out of our asses. They have zero interest in providing any relief what so ever. You see, they have no feeling, they are corporations, therefore I have zero feeling as well. Dam straight. I want the assholes who made billions, continue to make billions, the corporations and bankers to take and accept the losses.

   Wake up America. How about if we withdraw every penny from the bankers. Then they won’y have any monies (other peoples monies) to build their branches, building and wealth. Walk into a bank and try and get a loan without any of your own skin in the loan. Well, thats what the banks do throughout the entire banking and lending business. Lets bring them and the corporations to their knees. Take your country back. If you think politicians run this country, please. You ever hear of lobbyists for bankers and big corporations.

   By the way, if you think there is a difference between Dems & Republicans, here a news flash for you.

   Another by the way. Why is it so hard to have affordable health insurance for the citizens of the United States when certainly I would love to have the same health insurance provided to congressmen, women, US Senators and the like. Oh and its free of charge to them, thank you very much paid for by, thats right, me & you.

   I could go on & on, but probably wasting my time.

   Gasman

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