No Cost Stimulus Plan To Revive The Real Estate Market
A Stimulus Package That Costs Nothing to Implement, Raises Real Estate Values, Creates Jobs Almost Instantly, And Makes Money for the Banks and the Government in Less Than One Year.
- (1888PressRelease) October 03, 2011 - We all know that without the revival of the Real Estate market the economy cannot improve as much as we would like it to. Being a Real Estate and Mortgage Broker for the past 26 years I have come up with this solution that benefits almost everyone. This may be the biggest transaction of my life, without pay, but it will help the economy and the country.
In The Next 5 Minutes I'll Show You How My Stimulus Package Costs Nothing to Implement, Raises Real Estate Values, Creates Jobs Almost Instantly, And Makes Money for the Banks and the Government in Less Than One Year.
Underwater Properties: an underwater property is a property that its owner owes more on the property than the property is worth, but, he or she wishes to keep the property, still has a job but has suffered a reduction in income, can afford a modified loan and wishes to occupy the property as his/her personal residence. Sample property:
Home value = $150,000 Combined loan amount on the house (the sum of 1st, 2nd, or even 3rd mortgages) = *$200,000 Underwater amount = $ 50,000
Refinance: Banks to Streamline Refinance the entire $200, 000 ( @ ) 3 dot 75% annual interest rate payable interest only for 10 years and then convert into a 30 year amortized loan dot
Trust Fund: Establish a Mortgage Insurance Trust Fund where insurance premiums are deposited. Government to insure the underwater amount plus 20% of the total loan by imposing a one-time fee equal to 2.75% of the loan amount as an insurance, like the mortgage insurance companies did. This fee to be paid by the bank to the government and be added to the loan not to burden the borrower to come up with it in advance.
Example: Loan amount $200,000 Property Value $150,000 Underwater Amount $ 50,000 Mortgage Insurance= 2.75% of $50,000 + 2.75% of $40,000 (20% of $200,000) = $2,475. This formula insures the Mortgagee the Underwater amount plus a 20% to compensate for the 20% down payment ordinarily required during a purchase transaction.
Personal Guarantee: Borrower signs a personal guarantee for the loan for a 3 year term, after the 3 years have passed the property remains the sole collateral for the loan.
In the event of the borrower's default, this insurance pays for the difference and covers the bank's losses.
The amount that the government pays to the bank, if the borrower defaults within 3 years of the refinanced loan, becomes a personal loan to the defaulting borrower, a personal loan that survives bankruptcy, just like student loans.
Assumption: The new loan to be an assumable loan to qualified buyers. The Bank may charge 1% of the loan amount as a transfer fee, plus a set $500 Combined Processing and Funding fee and 0.5% of the loan amount for escrow and Title fee. The bank may (at its own discretion) ask for, accept, or reject a physical inspection report showing an acceptable condition of the property to the lender.
Prepayment: The loan to have a no prepayment penalty clause.
Credit Report: As an additional incentive, finance companies or banks must remove derogatory credit from credit reporting agencies for borrowers who qualify and obtain such loans at new terms.
Annual Interest rates to be fixed at 3.75% for conforming and 4.125% for jumbo loans.
Foreclosed properties: Foreclosed properties are properties that the owners ultimately had no way of refinancing, and not enough income to support their mortgage even if and when modified. They chose to let go of the property.
These properties are a major burden on the banks that had the financing for these homes and the real estate market in general because they are causing a major over supply of properties which, in turn are devaluating entire neighborhoods. Solution:
Government to purchase foreclosed property from bank at loan value. This will clear the banks from its books to allow for new financing.
Offer said property for lease with the following conditions to promote and incentivize potential tenants:
1. Offer the property on lease with an option to buy at a predetermined price which should equal the total of the cost of the government purchase of the property from the bank plus 10%, for example: property cost the government $200,000 to own, the price for the tenant to pay in the event tenant wishes to purchase this property within the 3 year term offered to him will be $200,000 + $20,000 (10% of $200,000) = $220,000.
2. Credit all lease payments made by tenant towards the down payment if tenant chooses to remain in the property and eventually purchase the property within 3 years. Tenant forfeits this right if he chooses not to buy property within the 3 years period and all money paid remains past or paid rent.
The term of the lease to be 3 years or less to qualify for the credit.
This will guarantee that government money is not lost; actually, it is making money and taking a lot of inventory out of the market while helping owner occupancy.
3. Damage To property due to foreclosure:
Any borrower, who leaves or abandons his or her property, or lets his or her property go to foreclosure, must hand over the property in a normal wear and tear condition. No additional damage should be made to the property blaming the bank as the cause for the foreclosure and that revenge is in order, such as: pulling drywall from the walls, pulling out appliances, causing plumbing damage, inflicting roof damage, or doing anything that is out of the ordinary. The government will be authorized to place a personal lien on the owner who caused these damages whether the bank or the government end up fixing it to bring the property to its normal condition.
Damages charged to borrower are to survive bankruptcy protection. Excess money in borrowers' pockets will incentivize him/her to spend more. This spending will cause businesses to hire more employees and get the ball rolling. The demand created will tighten supplies which, in turn will generate a moderate inflation, increase asset valuation, and eventually lead to higher rates and increase the GDP (Gross Domestic Product). It is Not a Secret that When the Real Estate Market Improves the Economy Improves.