Comments on: Disastrous December Collapse Exposes False Start to Housing Market Rebound http://moneymorning.com/2010/01/26/housing-market-6/ Global Investment News Mon, 13 Feb 2012 18:41:47 +0000 hourly 1 http://wordpress.org/?v=3.3.1 By: The Headline You Never Expected: Foreign Growth Could Bail Out the U.S. Economy http://moneymorning.com/2010/01/26/housing-market-6/comment-page-1/#comment-25767 The Headline You Never Expected: Foreign Growth Could Bail Out the U.S. Economy Wed, 18 Aug 2010 14:26:53 +0000 http://moneymorning.com/?p=15976#comment-25767 [...] (GDP) growth projected for the second quarter was inventory buildup. Government spending and a temporary housing blip – caused by the homebuyer tax rebate, which expired April 30 – accounted for the [...] [...] (GDP) growth projected for the second quarter was inventory buildup. Government spending and a temporary housing blip – caused by the homebuyer tax rebate, which expired April 30 – accounted for the [...]

]]> By: LARRY S http://moneymorning.com/2010/01/26/housing-market-6/comment-page-1/#comment-12240 LARRY S Fri, 29 Jan 2010 00:08:29 +0000 http://moneymorning.com/?p=15976#comment-12240 The government program HAMP will not work for amny reasons. I have proposed to a couple of congressmen and Senior V.P.'s at a couple of major banks, what I feel is the corrrect way to help alleviate the housing foreclosure situation...long term. HENCE: SOLUTION: A business partnership between banks,the federal government and home owners with upside down mortgages. Step 1. Banks set up a new loan division that can be called "Equity Loan Participation Program". Step 2. Banks re-appraise loans currently going into default and re-structures the loan at CURRENT market value with current interest rates amortized over 30 years, with a 5-7 year due date in return for an equity position. At that time the home owner will either re-finance or sell the home to pay off Banks equity position. (Fail safe clause): Home owner has the one time option to an additional 3-5 year extension in the event hyper inflation has caused interest rates to sky-rocket at the time of re-finance. If a loan extension is needed home owner would increase Banks equity position by 5% Step 3. Home owner gives Bank an equity position in the future appreciation of property. Estimate (10-15%) . Step 4. Federal Government offers tax credits to Banks under this program by not making Banks increase their Capital Reserve requirements or cause additional penalties by having to "MARK TO MARKET" these loans on their books under the new loan program "Equity Loan Participation". Step 5.Federal government gives home owner tax relief from the write down of mortgage which would normally be taxed as "Mortgage Relief" causing a capital gain problem. Home owner gets a new $350,0000 Mortgage. Appreciation in most areas of the country should be between 4% to 6% annually over the next five year. HOME APPRECIATION on $350,000 (using 5% appreciation) =$446,700 (rounded off and compounded) Bank would earn $9,670 over 5 years roughly 2.76% ( plus interest on new mortgage) and not have costs of foreclosures, more bad loans on books. (To increase Banks yield Federal Government could also allow this interest to be tax free or deferred). Home owner would still have an equity position of $87,000. Creating jobs Recognizing the fact that 60%+ of our Gross National Product is generated by consumer spending, the economy should be able to move forward without the federal government continuing to print funny money and giving it to companies that should probably be allowed to go bankrupt or bought up by successful competitors. Putting a "bottom" on the real estate market, minimizes anxiety and creates more of a feeling of financial security and in turn will help start consumers spending again, causing manufacturer's to produce and jump start job creation. (This plan can also work for the now depressing commercial real estate market. The government program HAMP will not work for amny reasons. I have proposed to a couple of congressmen and Senior V.P.'s at a couple of major banks, what I feel is the corrrect way to help alleviate the housing foreclosure situation…long term.
HENCE:
SOLUTION:
A business partnership between banks,the federal government and home owners with upside down mortgages.

Step 1. Banks set up a new loan division that can be called "Equity Loan Participation Program".

Step 2. Banks re-appraise loans currently going into default and re-structures the loan at CURRENT market value with current interest rates amortized over 30 years, with a 5-7 year due date in return for an equity position. At that time the home owner will either re-finance or sell the home to pay off Banks equity position.
(Fail safe clause): Home owner has the one time option to an additional 3-5 year extension in the event hyper inflation has caused interest rates to sky-rocket at the time of re-finance. If a loan extension is needed home owner would increase Banks equity position by 5%

Step 3. Home owner gives Bank an equity position in the future appreciation of property. Estimate (10-15%) .

Step 4. Federal Government offers tax credits to Banks under this program by not making Banks increase their Capital Reserve requirements or cause additional penalties by having to "MARK TO MARKET" these loans on their books under the new loan program "Equity Loan Participation".

Step 5.Federal government gives home owner tax relief from the write down of mortgage which would normally be taxed as "Mortgage Relief" causing a capital gain problem.

Home owner gets a new $350,0000 Mortgage.
Appreciation in most areas of the country should be between 4% to 6% annually over the next five year.

HOME APPRECIATION on $350,000 (using 5% appreciation) =$446,700 (rounded off and compounded)
Bank would earn $9,670 over 5 years roughly 2.76% ( plus interest on new mortgage) and not have costs of foreclosures, more bad loans on books.
(To increase Banks yield Federal Government could also allow this interest to be tax free or deferred).

Home owner would still have an equity position of $87,000.

Creating jobs
Recognizing the fact that 60%+ of our Gross National Product is generated by consumer spending, the economy should be able to move forward without the federal government continuing to print funny money and giving it to companies that should probably be allowed to go bankrupt or bought up by successful competitors. Putting a "bottom" on the real estate market, minimizes anxiety and creates more of a feeling of financial security and in turn will help start consumers spending again, causing manufacturer's to produce and jump start job creation.

(This plan can also work for the now depressing commercial real estate market.

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