Mortgage Buydowns: A rapid recovery for the Economic Stimulus
What is the basis of our economic crash? How ccan government and private industry address the root of the problem - in a way - taht actually stimulates recovery and correction? Why do politicians continue playing with our national economic health with half measures? Consider this idea!
President Obama has introduced a mortgage stimulus package that addresses a small portion of the financial crisis, in that it attempts to slow down the rate of foreclosure on “at-risk” mortgage loans; but does not address the broader market-wide property devaluation, nor future economic stresses on “good loans” and the consumers who currently are able to pay them, nor the accountability of the industry for the historical actions taken, nor any rewards to consumers who were frugal and conscientious in their home purchases. We are all victims of an industry that over-inflated the values of property purely for profit; and now the President and Congress proposes - what they contend are necessary - measures that ultimately are rewarding the greedy and reckless for criminal and risky behavior.
Certainly some measures must be taken to forestall the rapid deterioration of our financial infra-structure: some measures that will truly bolster the confidence needed for the financial markets to stabilize and rebound.
It is possible that all economic indicators are correct to suggest that our troubled banking systems need propping-up and rescuing by the government, since the capacities of these financial institutions are currently shrinking daily. But do they deserve to be rewarded, as private corporations, for their irresponsible predatory actions against the American consumer. It is pretty certain that these same corporate entities are not providing a similar level of assistance to the millions of mortgage holders who were duped by their scandalous behavior. It was these corporations, along with the federal agencies and real estate industry regulators who all compromised the stability of global financial markets by escalating property values, creating extremely risky financial systems, de-regulating corporate conglomerates and "green-lining" certain economic demographics for pure profit. Their actions demonstrated absolutely no concern for the impact on either the American or world economy.
It has been conjectured that the basis of the current economic condition lies in the uncertainty of bundled mortgage investment packages that no investor or bank wants to touch; and the problem for the consumer is that this has tightened lending, stifled market growth and left the consumer with tremendously deflated property values and few sufficient institutional supports for recovery. A financial stimulus, to the banks, is only potentially a part of a larger solution needed. Getting to the core of the problem requires a resolution that will move our economy forward rapidly...and here is how I believe this is possible.
Should the federal government designate a portion ($300 billion)of the stimulus package to "buy down" mortgage principles (i.e. - any made between 2002 - 2008: approx. 5 mil loans) by 25 - 30% (max. $60.000.00), it would:
1. put that $ 300 billion back into the banking system, while
2. punish the industry by reducing principles and also reduce the interest they gain – forcing their responsibility in the correction
3. make mortgages more affordable for the average consumer
4. provide certain relief for everyone and help slow down future foreclosures,
5. provide savings that the consumer could then spend on other market products and services,
6. stabilize "bad" mortgages and make those bundled investment packages more attractive to investors,
7. encourage lending by global investors who – at this time – are not,
8. serve as a pragmatic model for stimulating the economy and stabilizing the failing markets around the globe and
9. provide a “feel good” to the regular “Joe public” who is now suffering and is petrified about how this happen to a nation like ours.
If we are to remain the leaders of the world by setting the trends that make people’s lives better, then let's institute "real" solutions to this economic crisis that will demonstrate - to the world - that we are who we claim to be… INNOVATORS.
