I have a better idea for the $819 billion in the proposed stimulus package. Instead of construction projects that are shovel-ready and will be done some time anyway, or giving more to the banks, or sending everyone $1k that they will put toward their credit card debit, why don’t we use it to put a floor under home prices, halt foreclosures, put hundreds of dollars in millions of American’s hands every month that they will in turn put back into the economy and prop up mortgage-backed securities that will save the banks? All of it will spur growth in the economy and create jobs.
Sounds great, right? Let me tell you how. Use the $819 billion to pay off the negative equity in 7.4 million American homes. That is over $100,000 that could go toward negative equity in every home in American that is currently underwater. And it gets even better. We the taxpayers could get some of that money back. If someone accepts it, then their mortgage broker reassesses their property value and must put them into a low-fixed-interest-rate loan with the new reduced principle. If the homeowner then later sells the home at any time, he has to pay the taxpayers back at least 50 percent of the equity from the sale, up to the total amount of negative equity that was forgiven.
I guarantee this plan to work, to work immediately, to continue to pay dividends for years to come and to solve all of the current economic woes like low consumer confidence, bad mortgage backed security debt, foreclosures, falling home prices, layoffs--you name it. This plan is the rewind button to the housing collapse.
Here's the Negative Equity Report, state by state.
Feb 3 2009 - 1:37am