Friday, December 19, 2008

Help the home owners, NOW.

We need to stop giving money to these financial institutions, and give money to the home owners. IN a much earlier post I talked about why the 700Billion dollar giveaway was wrong. I am going to elaborate on that a little here. Funny how it took, what 2 weeks for a bill to pass, but it is taking forever to get any real help to the citizen.

A) It turns out banks lied an several fronts.

B) Lenders took advantage of new borrowers who didn't understand the fine intricacy of the finance system

C) Banks were aware of what was coming, and kept lending.

D) Helping the home owner in default gets the economy moving faster then giving it to banks.
Maybe, Maybe if there was a sound plan when they wanted to give the money to these financial institutions it might work. It worked in englans during their crisis.

No, I'm not going to remove blame from the home owner. That's not what this is about, it's about helping the economy as a whole.

Personally I would do the following:
1) Foreclosure get's put off 90 days. If payment can restart at that point, it starts as per normal. No foreclosure penalties.

2) If it can't then restructure the loan to see if that helps.

3) Drop the interest rate to 4.5. If people still can't make payments, guarantee 4.5 to the next qualified buyer. This is to entice some to get into the home.

Now, I am having a hard time telling how bad it really is, reports are all across the board. Usually that means it's worse, but it's not a sure thing.

If it is extremely bad add the following.

Walk away. Someone can opt to walk away from the home, no credit hit.
Yes, the banks take it in the shorts on this one. But it will cause an immediate adjustment to the actual current value, and gets someone in the house.

This would all have to be passed by congress to force this issue becasue of Collateralized loans. where many people own a loan.

The banks have lent way too much, and the reaper as came to collect it's toll.

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What I mean by 'Idea'

By 'Idea' I mean something practical. This might be an improvement or something new but it should be practical.
For example:
"We should all have jet packs."
While a great idea, it's not very practical.
If I had an idea on how to improve the thrust/weight ratio, then that would be a practical idea. That being the only real problem that would need to be solved for jet packs.