"Waves of More Foreclosures" = More Bank Failures + Big Trouble for the FDIC, Suttmeier Says

Time is of the essence for a bold new approach to foreclosure mitigation. What is needed is a plan that can be implemented quickly and broadly, lowering the monthly mortgage payment so that homeowners can afford the payments and stay in their house. The plan we are proposing is simple.

• Years 1-5 rate of 2-3% with interest only option for owner occupied properties.
Year 6 rate of 3%, Year 7rate of 4% rate and Years 8-30 rate of 5%
There should be an option for a 40 year amortization program.
• Non-owner occupied can participate at a 1% higher interest rate.

An appraisal will establish the property’s present value. That will establish the new “Interest Bearing Principal Balance”. The difference between the loan balance which include loan amount plus arrearages at the time of loan modification is divided equally and 50% are principle forgiveness and the other 50% become noninterest bearing “Deferred Principal Balance” due on sale of the property or in 30 years at loan maturity.
Let us say we have a 500,000.00 dollar loan with 20,000.00 in arrears and appraised value of 300,000.00. In this scenario 110,000.00 of the loan is forgiven. The bank has 110,000.00 Deferred Principle Balance and 300,000.00 Interest Bearing Principle Balance. It is a win-win situation for everybody.

We should make this loan modification simple. The individual homeowner should be given more power to decide what program is best for him. Bank personnel and other consumer counseling groups can assist him in his decision.
We should have no income, asset, housing value or payment history qualification requirements. All residential 1 to 4 unit properties with a loan payment start date of January 1, 2002 and after are eligible, other than VA and FHA loans.

The benefits of this program are:

• A simple, standardized program that can be implemented quickly
• Estimated 60 to 80 percent foreclosure mitigation on current foreclosures
• Estimated 80 to 90 percent foreclosure mitigation on future foreclosures that will occur with adjustable rate mortgages when interest rates increase
• No new federal agency to monitor and/or implement the program
• Low or no cost to the US Treasury
• Economic stimulus due to the lowering of mortgage payments for millions of homeowners
• Lower losses to holders of mortgage backed securities, potentially stabilizing the secondary mortgage market.

In most places today it makes economic sense for people to walk out from their mortgage, rent for a while and they are happy to hear that three years later they can buy again.

We need to have a plan that modifies all mortgages without restrictions. Modify without any questions asked.
We should have principle reduction for all under water mortgages and 2% to 3% interest rates for all conforming loans with 3.50% to 4% interest on jumbo loans and non owner properties. If we do this we will stop foreclosures and at the same time we will also have a great new economic stimulus package.

The economy after 9/11 was mostly driven by the Real Estate and the refinance boom that according to some estimates placed over 150 Billion dollars per year in the hands of consumers. I do not know much money a drop of interest rates to 2% to 3% will put in the hands of the consumers in the next 4-5 years but what we know is that it will cut their monthly mortgage payment by more than half and all that money will provide a much faster stimulus to the economy than the 787 Billion economic stimulus package.
“In a recent study, Fernando Ferreira and Joseph Gyourko of the University of Pennsylvania, together with Joseph Tracy of the Federal Reserve Bank of New York, found that people who owe more on their mortgages than their homes are worth are about a third less mobile. David Altig, research director at the Federal Reserve Bank of Atlanta estimates t

Fannie and Freddie need go ct14 or bankrupt we need stop puming cash in these worthless scams

We are prisoners to our corrupt political system courtesy of corrupt corporations and their lobbyists. In many ways, Republicans and Democrats are alike although Republicans are at least 3 times worse than Democrats. Republicans are twice as corrupt and only half as smart. One only has to look at the Republican mouthpieces of Sarah Palin and Sharron Angle to realize that Republicans are inept, corrupt, or both. At least Democrats try to help the people. Republicans can only ramble on about how great capitalism is, when in reality, America no longer has capitalism. Due to corporate corruption, America only can boast of corporate cronyism and monopolism, enforced by troops of lobbyists. But you do have a say. Vote out every last corporate lackey (most Republicans, a few democrats) and keep on doing it. Demand term limits. Just like diapers, DIRTY politicians need to be changed often.

I guess all the experts in DC and state gov'ts still don't get it?Debt too high,too many people on civil service at inflated salaries & bfts,too much profit on war material and big financial orgs need to write off some of their losses each year and not park it in nebulous accounting.Globalization can work if we get at least 75 cents of goods exported for every dollar we import? Propping up slave labor wages in many countries aggravates free trade concept.Big money is too inflential and controlling.A free market economy requires value added and discipline by labor,mgt and Gov't. Lots of real constructive thinking and planning required,not quick fixes and welfare for the rich,but present leaders are not up to really putting the best minds to work and more interested in protecting and expanding their fortunes.We'll yet see many offices on wall street closed,gov't layoffs and much pain unless our leadership changes its thinking and actions.We can do much better.Time long past for a gov't of national unity.

The Federal Reserve has failed. The whole purpose of the Fed was to magically enable fractional reserve banking by making it all too big to fail. Well it has failed. Instead of a bunch of little bank panics like we had prior to the Fed when they made too many loans without enough capital, now the whole system is coming down. We're headed for hyperinflation. This has proved once and for all that fractional reserve banking does not work. It's a giant Ponzi scheme. We need to dissolve the Fed, return to a hard currency, and have 100% reserve requirements. If you deposit money in a bank it has to be either a time deposit or a demand deposit. A demand deposit you can get back any time but does not pay interest and in fact you have to pay a small storage fee. A time deposit pays you interest but you can only get it back after a set amount of time (like a certificate of deposit account) because it has been lent out to someone else in the meantime. The bank cannot simultaneously give you your money back while it has also loaned it to someone else. Loans have 100% capital backing. That is the only way to have a stable and non-fraudulent banking system.

We need to focus on creating real values in our lives and not false values that evaporate. If you build your house on sand, it will crumble. Why don't we have more fruit and nut trees, herbs, and better vegetable gardens in our yards? Because most people are dreaming and asleep. You can't be prosperous if you think all value is in dollars and cents.

Pulled our money out of the bank. Sold the house in 2000 and am now renting at $545. a month..Payed off both cars and maintained them..Payed off our credit card debt litterly froze the card..Yep i put them in a jar of water attached to a rock and then into the freezer.
We buy what we NEED with cash only. We saw the writting on the wall back in 2000 and made adjustments...Thank you GOD for the vision.

Who Cares? The time to act has passed. In 2008 economist Robert Shiller advocated a Homeowners Loan Corp to solve the subprime crisis. It would have prevented 3 million foreclosures to date and millions more in the years to come.

A 30% decline in RE from here would mean we're only about 1/2 thru this mess, a depression would be a certainty if that happens. Property values would be below zero in the sand states if that happens LOL

There would be stampedes of walkaways, banks failures you name it!

How we do'in???