Don,
With the exception of where I said people who could qualify could refinance to gain capital, I wasn't adding to the credit. What I was doing was making it so far less money temporarily would be spent on loans which would put a lot more money in people pockets.
I believe the lower interest, and the fact that for the 3 to 5 years period the loan became interest only, to a great extent foreclosures would drop tremendously. Under these loan terms, but subject to qualifying for the follow on loans, I believe most foreclosed property could be sold and occupied, or rented, within a year or two.
If most foreclosed properties were occupied, foreclosures were down tremendously and all the mortgage interest that wasn't being paid spurred the economy, I believe we'd find that in 5 years when the loans revert, property prices would come back in most cases to at least nearly where they were. Perhaps in the case where this failed to happen an extension of the lower interest rate loan would achieve that goal. The idea is that by the time all the loans reverted, to the original, both the bank and the owner should be in position to carry on. Where someone wishes to sell a property that's worth less then the loan, the seller and bank would have a proceedure for handling the sale.
My point is, this would put cash into peoples hands, it would rarely increase their credit load. I believe all this money would spur the economy, unemployment would improve, manufacturing would increase, and with all the Presidents anticipated moves toward infrastructure, environmental and energy interest, in a couple years the economy, and that of the rest of the world, could be booming again.
JMHO, perhaps the banks would be making a little less on all these lower percentage mortgages, but aren't they the ones who got us in this mess, and aren't they already being given 700 billion to bail them out. Why not pay the rest of us with low cost money.
Gary |
