McCain's Housing Plan

I have been a staunch supporter of Obama until now.  The homeowner plan is a smart plan and Obama is losing me by shunning it solely because McCain is offering the plan.  let's be real here.  It is a DEMOCRATIC plan.  Hillary Clinton proposed something similar and Dennis Kucinich has been beating his drum about it.  News people, please investigate it and report on a non-partisan basis.  I STRONGLY believe is the only viable solution available to the US.  

If people have little expendable cash they slow down buying products or services which is where we are now.  If products and services aren't bought, the companies that make them go out of business.  If the companies that make products and offer services go out of business they lay off their employees.  If they lay off their employees, the employees have no money.  And it goes around and around again until we are depressed.  The way we got out of it the first time was to create an enormous government social program called the military buildup of WWII. 

By forgiving borrower debt for those that can't pay it, it stops the foreclosures which stops the decline in home values which helps every homeowner.   It may cost each American $3,000 in taxes, but it will save $10,000 or more (perhaps the entire value of each house) in equity and will allow people to spend money on products and services, reigniting the economy.  Perhaps a shared responsibility plan with lenders would work.   Have lenders take 70% of the loss and have the government make up the rest, for example. 

The current bailout will not help because freeing up credit only ALLOWS companies to lend money.  If a company makes widgets but no one knows if anyone is going to buy widgets, then why would a company lend them any money?  Some companies are pulling any predictions of profit and loss right now because they have no idea what is going to happen.  Also, freeing up credit will not help mortgage lenders either.  With houses declining at record paces - why would anyone want to lend to a new home buyer?  The collateral could very well be worthless in a short period of time. 

Please be straight about this issue.  It is too important! 

I would be happy to talk about this solution in more detail. 

Thank you,

 

Brian Ward

A Real Estate Professional

A Potential Solution to the Economic Crisis

Below is an outline of a solution for our economic crisis that I think needs to be considered. I ask that if you agree that it should at least be discussed, that you forward it to as many people as you can while there is still time. I have sent the outline below to both presidential candidates, my representatives in congress, and to all major news outlets but with your help I hope to get it to everyone else and encourage a discussion. Thank you!

At the core of the crisis is bad debt from the housing market. According to the "bail-out" bill there are 2 million foreclosures estimated for the next year. If each of these mortgage loans is negotiated to market value now and the average loss on each loan to the lenders is $100k, the cost for the Federal Government to pay the difference is $200 Billion - FAR less than the $700 Billion in the recently failed bill. The difference is, it is a Main Street to Wall Street solution to the problem but it can have the same effect as the failed bill for Wall Street because the money goes straight back to the lenders with the bad debt. If $200k per house is more appropriate, then it is $400 Billion which is still less, but I think it is irrelevant if the price for this homeowner assistance is $2 Trillion because it will solve the problem which the Wall Street bail-out plan likely will not do because it will not increase/stabilize home values.

It is a win-win for Main Street and Wall Street. This plan keeps people in their homes, stops the decline in home values / stabilizes the housing market (which helps every American, even those who are not facing foreclosure), and infuses lending institutions with 100% of the capital. It will bring confidence back to the American economy and it will free up the average American's pocket book which will help to restart the American economic engine from their spending.

It is important to also consider that we may not need to assist the full 2 Million homeowners if we can stop the decline in the market now. More people will be able to renegotiate their loans over the course of the next year because their home values have not dropped below the level where refinancing is not possible and if home prices quit dropping, some people will consider their houses worth fighting for and not just throw up their hands like they are now - and people will want to actually buy houses again.

This plan will be paid for with the increased tax revenue from the renewed economy.

There are more details and more arguments as to why this solution is ethically acceptable and economically feasible than I can provide, but I wanted to get this solution considered ASAP.

Thank you for your attention and help.

Brian Ward myeconomicsolution@gmail.com