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Real Name: Leonard C. Tekaat Gender: male Date of Birth: August 13, 1944 Member Since: November 17, 2008 Last Signed In: September 26, 2009 Profile Views: 13 Blog Views: 1040 Mortgage Modification - The Impossible Dream Obama's Mortgage Modification Program, Make It Work! What The Bakersfield Ca. Didn't Print Obama's Mortgage Modification Program, Make it work! Stop Making Your Mortgage Payments HOW CAPITAL IS CREATED PLAN B - BALANCE CA' BUDGET The Frustrated Women. Letter to Ca. Senator Roy Ashburn Correction November 08 December 08 January 09 February 09 March 09 April 09 May 09 June 09 July 09 August 09 September 09 October 09 November 09 
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Obama's Mortgage Modification Program, Make It Work!
To US Treasurer Geithner:
To make housing affordable we need to change the terms of our mortgages so Fannie Mae and Freddie Mac and other government agencies can fund mortgages at lower interest rates.
Banks and financial institutions are not able to loan homeowners money to refinance their homes or for new mortgages, when home prices are decreasing.
If an adjustable rate mortgage was created with a starting interest rate (3%) to jolt the economy back to life, the toxic securities will become valuable again. The interest rate on these new mortgages should increase one-quarter percent per year and cap out at the currant market rate of 5%. To decrease defaults on mortgages, the borrower would have to qualify at the 5% interest rate to obtain the loan. These new mortgages should not be tied to any index.
We are currently trying to capitalize the banks by infusing the money directly into them. This policy is wrong because the collateral is losing value. The value of the collateral must be stabilized first, for the banks and investors to be confident enough to lend money against it.
What will this stimulus plan do for the economy? When the homeowner refinances their home from a 6% mortgage interest rate to a 3% interest rate their monthly interest payment will decrease by 50%. A $1500.00 monthly mortgage interest payment will decrease to $750.00. That will be like the person receiving a $750.00 stimulus check each month for the first year and thereafter a little less each year for the next seven years. Multiply this by millions of people and you will have a stimulus plan that puts the purchasing power were it should be, with the people. The foreclosed property inventory would be quickly sold and housing prices would stabilize. Banks and investors should be encouraged to modify the underwater mortgages by changing the tax code so that it would be beneficial to them and the borrower when the excess amount of the mortgage is reduced. Loaning money to banks does not create demand in the economy, people do!
If mortgage interest rates were available at a starting rate of 3 or 3.5% and the borrower was qualified at a 5% interest rate, the chance of a foreclosure would be close to zero. The eight years it would take for the interest rate to rise to 5% would allow the economy to heal. Business activity would increase; this would increase the value of commercial properties reducing the coming crisis in that area of the economy. With home values stabilized investors will be willing to invest in mortgage securities again rather than treasuries. With the mortgage interest rate increasing every year, the investor will know that their rate of return will increase for the next seven years unlike treasuries.
With the enactment of the Zero Inflation Taxation Policy this will help control inflation and inflation psychology which will maintain the lowest possible interest rate, which will help maintain the value of the mortgage securities. (Go to web site to read about this policy change and its benefits.)
3 comments from 2 users
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posted by
Shwaine
on Sep 24, 2009 at 11:22 AM
The feds can't even get banks to comply with the current Making Home Affordable modification program (that does a lot of what you're proposing). posted by
happyashell
on Sep 24, 2009 at 01:39 PM
To Shwaine: The banks need to realize that they can make more money in an economy that is working than an economy that is in recession.. The housing crisis was caused by the capitalistic entity and the government entity, not the enterprise entity. The banks and security investors need to modify mortgages and the government needs to change tax policies to end the recession as soon as possible to increase tax revenues without raising taxes, which will decrease the deficit. It is by improving the confidence and the financial condition of 90% of the population that will bring us out of recession not government programs that help the 10% unemployed. The lowering of interest does not add to the deficit or decrease government revenues like tax cuts do. The lowering of mortgage interest will not weaken the American dollar. It will strengthen it because it will allow the economy to work, thereby increasing employment and reducing government liabilities. posted by
Shwaine
on Sep 24, 2009 at 02:08 PM
Banks have a tendancy to focus on the short-term and not the long-term. For example, Kern Schools wants to close down all lines of credit you have with them (Visa, Ready Cash, etc) before they'll process a mortgage modification. That's very short-term minded of them, particularly with the borrowers who are only in a hard spot due to employment issues (unemployment, cut in pay, etc). By implementing this policy, they're not only fostering ill-will, they're also losing sight of the fact these borrowers may be great customers in the future when their employment situation brightens. They're so focused on limiting short-term losses that they are ignoring long-term gains.
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