The Terms of the 700 Billion Bailout
It’s actually great news that this proposal of the bailout failed. I don’t think that $700 Billion should be handed over to the same people who were in charge while our economy was falling apart in the first place, and there aren’t any solid terms.
I would like to see a plan with lock tight details. No room for flexibility. When a deal is struck, each side knows exactly what is expected, in what time frame it can be expected and what measurable criteria can be applied to determine its success.
Treasury Secretary Henry M. Paulson Jr. said on “Face the Nation” that “What we need is something that is big enough to get the job done. We’ll ask for what we think is a right amount to give us plenty of flexibility.”
How out of touch these people are with main street America. I know that Henry’s is the voice of one person, but it is reflective of them all in Washington. Would I be able to walk into a bank and ask for a mortgage on my home that did not have a set amount?
“I think I need $300,000 but I need something that is big enough to get the job done so I’d like to ask for the right amount that will give me plenty of flexibility.” I just don’t think the bank would go for it.
Would I be able to ask for a loan and have no terms applied to it?
“I’d like to have the $300,000 but I’m really not sure what I’m going to do with it or if you are going to even get all of it back.” Really? If you look at what Henry and Federal Reserve Board Chairman Ben Bernanke said to Congress last week, that’s what you should have heard. The same mentality that got us in trouble in the first place.
Yet, this is what we’re seeing. I have several suggestions. The bailout proposal was supposed to be for the foreclosure crisis we face. First of all, it would be nice if the bailout proposal presented before Congress would have something to do with the actual foreclosures. Don’t you think?
Second, in this day and age of the internet it should be possible to get an exact figure of what we need in order to cover the foreclosures across our nation. Develop a website, let the domain trickle down to everyone involved, have them input their exact data, let a back end spreadsheet compile it and add it all together. Present those numbers before Congress.
I could make it real easy to safeguard against abuse. You have to answer certain questions that establishes your criteria. It’s not really a pass and fail test. But, if you meet the criteria then you are invited to solve a Captcha. But this one has two values, the regular part of the Captcha that asks you to type in anywhere from 2 to 10 letters in a box to determine that you are human and another part that asks you for your social security number to determine that you are who you say you are.
One social security number per home is required and no more than one social security number per home is allowed. So if it’s a house that was bailed on by the individuals who could no longer afford to pay the mortgage, then the loan officer who was responsible for assigning that mortgage inputs the information with that social security number assigned to that house.
The checks and balances weigh themselves and everything comes out right.
Check if the social security number is valid and that the person who was originally assigned that social security number didn’t pass away in recent years before the mortgage was originated…alert 1 – pass.
Check the social security number against more than one property…alert 2 – pass.
…alert 2 – fail. Check to insure that the information was inputted correctly and if indeed that individual was issued mortgages against more than one property, manually override the Captcha null code and institute a full press inquiry on that individual.
Add column J and report the bottom line to Congress.
Rules of the Bailout:
#1 – All outstanding mortgages reported to Congress after required checks were made will be bought by the money determined in the bailout proposal.
#2 – All mortgagees who maintained residency of the property facing foreclosure will be issued a new loan agreement whereby they will repay only the actual value of the money financed on their behalf. No APR. No interest whatsoever. That was part of the problem to begin with when you are buying a house on credit and actually having to pay three times what it’s worth.
#3 – All abandoned properties will be sold to individuals who can provide proof of income that equals at least three times the mortgage payment on the house after being calculated for a 30 year term, no APR and no interest whatsoever.
#4 – All money loaned through this bailout proposal should be returned to the American Taxpayers who bailed themselves out in the first place, but without any profit incentive. This is not the time to be taking advantage of the adverse situation we face.
If you really want to see how bad this crisis is, here are the following numbers and the reporting agencies:
The Federal Housing Finance Board reports that the average purchase price of a conventional single-family home was $291,000 as calculated in September of 2007.
The U.S. Federal Reserve Board reports that the total mortgages outstanding in the U.S. are $13.98 trillion USD.
$700 billion would bailout approximately 2.5 million homes taking into account that the total mortgages outstanding at the time include homes that might have only been a month or two late and most people clean their messes up around tax time.
So looking at how a revolving door works, we bailout 2.5 million homes and a month later we have enough money to bailout another 4,000 to 5,000 which will increase exponentially every month while mortgages are being paid on a timely manner by those subject to the bailout process.
If worked efficiently, we can give over 2.5 million people back their Christmas. But, don’t get your hopes up at all. It’s the government skinning this cat.
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