Friday, September 26, 2008

The REAL way to fix the Financial Mess

The Problem with the current Bailout plans:
If we keep the structure as it is, and just "prop it up", people will still lose their homes, and the bailout money will go to investors who will "gobble up" real estate at fire-sale prices. The former homeowners, with limited funds, credit, and means, will not qualify for the new loans, and may not be creditworthy to even rent an apartment. This means people living in tents, under overpasses, and worse.

OK, so Congress doesn't get it, so what do we do?

My thoughts:

1. Write down ANY mortgage on a home by 75%, with the balance written as a new 30 year note. Homeowners would have to apply, and not all homeowners would take advantage of this, it is really for the ones who are "under water".

2. Have the banks take it on the chin, and give them tax breaks, incentives, etc., to help cover the losses.

3. Have conditional requirements on the write-downs; no additional lending without some sort of review, no immediate sale without review and a percentage of profit returned to the bank.

How this will Help:

Once the mortgages are back in line with incomes and more realistic home values, the homeowners will be able to support a lower mortgage payment, and even have some money left over each month. This will stimulate the economy with PURCHASING POWER. They need cars, home repairs, Health care, insurance coverage, vacations, (I think you get the picture).

This will give the ailing banks PERFORMING mortgages, and the homeowners can buy cars from GM, Ford, and others so the economy can rebound.

Are you listening, Washington?

Please feel free to forward this to your elected officials. I AM.

Thanks for reading, now do something!!
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