Solving the current economic crisis has become just an opportunity for corporate and banking/financial institutions to grab as much taxpayer money as possible. Many of the financial/banking and insurance institutions receiving taxpayer money were actually responsible for initiating this crisis. So why are these concerns being helped when those who they destroyed (i.e., homeowners) are being destroyed?
There would have been a pretty simple solution, which could have been enacted 6 months ago, that would have resolved the current situation almost immediately. Why wasn't it considered? The answer is simple, it would have required holders of mortgages to reduce the principal owed and to then sell their "toxic" paper to the Federal government at the new adjusted prices. These greedy, criminal "financiers" could not conceive of being on the losing end of the proposition and heavily lobbied Congress, the Federal Reserve and the Treasury Department to ignore this option.
Here's exactly how it would have worked and what the result would have meant to homeowners and the Country's economy.
- The Federal government nullifies all "no doc" mortgages, unless the "homeowner" can now produce the proper required documentation that proves they can afford the property. Otherwise, the Feds allow those properties, purchased by people who couldn't afford them to go into foreclosure and the proceeds are returned to the Federal Treasury to assist in funding the remainder of the plan;
- The Federal government then requires all holders of residential mortgages to allow a unbiased panel of real estate experts to reset the principal owed to realistically reflect the collapse in housing values;
- All mortgages are then sold to the Feds at the new adjusted prices;
- The Feds turn these mortgages, many initially ARM-types, into 30-year fixed obligations;
- The Feds pay all outstanding property taxes directly to the State on any homes that have delinquent property taxes and adds this amount to the mortgage's principal;
- Life continues and people can again see a chance to live without the constant fear of loosing their home to the same criminals that took advantage of the lack of governmental regulation and oversight to pocket huge profits at the expense of all American taxpayers.
Arguments against this plan will complain that some homeowners will receive more help than others and point to homeowners who have already paid off most of their note. This is true, but a tax credit or outright tax-free payment to anyone receiving less than what the average homeowner received would bring the playing field level and should have resolved this issue.
Positives of this plan are huge. Not only would it have totally resolved the foreclosure nightmare overnight, it would give homeowners hope. Homeowners would now have an opportunity to immediately begin growing equity in their home, instead of waiting 20 years and worrying the whole time that they'll never recover their initial investment. State governments would receive back property taxes that they desperately need to balance their budgets. Banks shouldn't need any additional funds from taxpayers to pad their already bulging wallets. People will feel more comfortable buying again, auto makers would see a turnaround in sales and other retail concerns would benefit from consumers having a brighter outlook for the future.
The cost? Less than a trillion dollars. How much have we already thrown away to make sure greedy bankers/brokers and insurance companies had funds available to pay themselves huge salaries and bonuses? The actual amount already wasted and the amount still to be thrown away is difficult to determine, but this plan would have easily cost less. In fact, it would probably have been less than what's already been given to the crooks that call themselves bankers, brokers, financiers, etc. If you think my figures are wrong, check them yourself. The median value of the American home according to the National Assoc. of Realtors is $202,000 with the average being $245,000. It's estimated that there are approximately 50,000,000 homes with outstanding mortgages. That would be about 1.2 trillion dollars if everyone owed the full amount of their original mortgage. Have we handed out and plan to hand out this amount yet? The answer is YES PLUS! But obviously not everyone owes the full amount of their original note, so the dollars needed to completely resolve this crisis would have been far less and if we hadn't also paid off the money boys to the tune of 2-3 times (and higher multiples in many cases) their initial investment, well I think you see my point.
Ok Washington, so what's your 5,000 page plan to waste more taxpayer money?
