There is 12.1 Trillion Dollars in outstanding mortgages of which 25% are approximately underwater
( have negative equity) Roughly that equals 3 Trillion Dollars, if a estimated 40% principal reduction was given to match the current appraised value, the cost to cure housing would be 1.2 Trillion Dollars.

A government mandate is needed to enforce the Recall, Reduction to appraised value and Replacement of all DEFECTIVE mortgages at the mortgage holders loss/cost/expense, CAPITALISM.

The band aid methods that are being put forth will not stablize nor help, if homeowners are still left financially harmed thru no fault of their own.

1-A homeowner who is current with their payments but has negative equity is automatically entitled to a principal reduction to appraised value. ( an appraisal that includes 2 Reo’s as comparables) at 5.5% FRM
There is no appreciation profit obtained for 5 yrs if current, and if delinquent 7 yrs.

2-A homeowner who is delinquent with their payments and has negative equity is also entitled to the principal reduction to appraised value SUBJECT to sufficient income to qualify at 33/41% ratios with the interest rate of 6.5% If they can’t or don”t qualify, the home is foreclosed whether it is due to job loss or they never should have bought the home to begin with. The “former owner” will be allowed to reside in the home until sold or up to 1 yr at a month to month tenancy paying rent, avoids having vacant/abandon homes.

3-All homeowners who are current and have equity or are equal to the current appraised value are entitled to an automatic refinance at the interest rate of 4.5%-5% ( higher rate for LTV’s over 80%)

4-First time homebuyers subject to standard underwriting guidelines are entitled to a 4% FRM.

5- The foreclosed homes would be sold to the public at the current appraised prices, if needed a government subsidy could be given to first time homebuyers in the form of a forgiveable grant for 10 years.

To sweeten the mandate, any dollar amount of loss involved in the Mandate by the investor or bank would be allowed to be multiplied by 3 for balance sheet/tax purposes.

The above was also sent to every Senator, FDIC and President Obama as a way to stimulate the economy with increased public spending power without harming more homeowners.

Since the Obama administration is going to try to put a floor under home prices through the use of lower mortgage rates and principal reduction, and they seem to be supporting auto prices through bailouts of GM and Chrysler, why not put price floors under other products?

I hate to see oil fall below $150 and gasoline fall below $4.50-$5. Gas should remain above $5, or more.

Obama should come up with a program to put a price floor under all commodities. A price support of potash and other farm products would help keep food prices up.

Obama can create taxpayer supported programs for every product sold in the USA. I have many ideas for price levels, but I’m certain that Obama has even more great ideas to keep prices from falling to affordable levels.
Obama, keep up the great work!

http://www.defendyourdollars.org/2009/02/obamas_foreclosure_plan.html

I may be the only one in the world who ever purchased his own mortgage at a deep discount and then sold the collateral for significant gain. I’ve learned one thing: He who controls the debt, controls the equity. We have to go back and underwrite what was not done the first time around. Simple. The accountability is back in the marketplace and credit markets restored.

You wrote several things that suggest entitlement or victim mentality and certainly not being responsible or accepting consequences of one’s actions.

“a lot of people … needed to buy a house” — Nobody NEEDS to buy a house. Rental properties are available. Owning a house is NOT an entitlement.

“they had no choice but to buy into the market that the speculators had ruined with ridiculously high home prices” – Nobody ever has NO CHOICE about buying a house. Buying a house with a RIDICULOUSLY HIGH price that they presumably can not afford is making an extremely poor irrational choice. In the process this action reinforces the speculators and in so doing THEY are speculators. These people are NOT victims of speculators.

“To get into these houses they had little choice but to use the insane mortgage terms that were available, and hope for the best.” — Nobody ever has LITTLE CHOICE about mortgage terms since they can choose to rent or move elsewhere. Nobody should ever make a major purchase (house, investment, etc.) based on HOPE FOR THE BEST. Unless someone defrauded them, these people are NOT victims of mortgage brokers.

“These people who are upside down or laid off will face an enourmous [sic] financial stigma for the rest of their lives if they are foreclosed upon, declare bankruptcy, or hand their keys back.” – Maybe not, at least after a few years. But even if they do, this is the risk THEY took by buying an unaffordable house on unaffordable terms. Like most of us, they have to be responsible and accept the consequences of THEIR actions.

“They may also face an impossible financial burden if they are left to “free market” forces and the predation that banks and other financial institutions inflict upon people on the edge in this country.” – Americans have a CHOICE about what they buy, when they buy, and with whom they transact. Unless defrauded, they are NOT victims of banks and other institutions.

“These people need mortgage relief, and don’t deserve to be punished for having the misfortune to not be rich in a system designed by and for the rich.” – Nobody is PUNISHED for not being rich. Like most of us, they have to be responsible and accept the consequences of THEIR actions. There is no grand conspiracy.

Your diatribe is wrong. The current situation exists because many people made extremely poor choices, often under the delusion that they are entitled to prosperity and an easy life. All of us should save for the future, prepare for the inevitable downturn in the economy (yes, such periods are NORMAL), live only within our means, be grateful for what we have and not succumb to greed or envy of others, and live a life commensurate with the honest value we provide in the work we do.

Hate to say it, but I think it’s time to tax the hell out of people like Stanford, Madoff, Wall Street execs who have such uber-wealth again. I’m starting to think we need to assume that most of these folks did something unseemly (in many cases a lot of unseemly, even illegal, acts) in their lives to accumulate such wealth. It’s hard for me to shake that nagging thought as these frauds are uncovered.

And, yeah, I completely agree with Mysticdog – tax the very rich at %50 and institute an 80% estate tax for anyone with an estate of more than $5M. Those are the folks who were running the economy when it crumbled so let them pay for putting it back together. Where are they going to go to escape taxes – Russia?

“• Home owers (No equity, 100%+ debt) who are in houses they cannot afford are going to have to move to homes or apartments they can afford;”

No, many of these home owners are in houses they could afford, if these houses had their price corrected to non-bubble standards. I know there are lots of speculators and people who really did get McMansions they didn’t need, but a lot of people were buying their first home, having to move to a new area, or accomodating a growing family and needed to buy a house; they had no choice but to buy into the market that the speculators had ruined with ridiculously high home prices. To get into these houses they had little choice but to use the insane mortgage terms that were available, and hope for the best.

These people who are upside down or laid off will face an enourmous financial stigma for the rest of their lives if they are foreclosed upon, declare bankruptcy, or hand their keys back. They may also face an impossible financial burden if they are left to “free market” forces and the predation that banks and other financial institutions inflict upon people on the edge in this country.

These people need mortgage relief, and don’t deserve to be punished for having the misfortune to not be rich in a system designed by and for the rich.

It is unfair to the average American taxpayer, to be certain. That is why the average taxpayer should not be asked to finance this. We need a very high tax rate for the top 1% of this country (like 45%-50%), until this crisis is managed and paid for. That puts the burden where it squarely belongs, on the “captains” who drunkenly steered this tanker on the reef.

As usual , the administration tries to take the easy way out … are they using Bush’s game plan ?????

idiots