What do you think of my “bailout” plan?
Instead of bailing out the large banks who caused this mess I have a real solution.
Freeze all foreclosures. Legislate that the money that would otherwise go to a “bailout” to banks, be given to the lending institutions that the foreclosing property owners owe in back payments to make them current, so they can start from scratch. Do not include mortgage brokers but the direct banks involved, so there are no closing costs, title searches or that litany of costs typically incurred in refinancing.
Restructure the loans for 40 or 50 years if necessary so that the new payments will be lowered (yes people will die before it is paid, but leave that to the heirs to decide to keep the property and continue payments or sell it).
Provide the lowest possible interest rate at .01% above the cost of the bank loan based upon the wholesale interest rate. Prevent the selling of any loan on the secondary market to any institution that is not solvent to again prevent another disaster. This way, people get to keep their home, lower their payment and the bank still gets its cash flow that they need to stay in business.
Then, legislate that the negative credit reports of these distressed homeowners be erased; with the stipulation that it only include home mortgages; not credit cards or any other kind of debt.
Finally, if all else fails, repeal the Bush bankruptcy code so that individuals can claim bankruptcy if they must, and make it so that one does not have to hire a lawyer (which they cannot afford) in order for it to be discharged. It’s easy for a big bank to do it, so why shouldn’t it be easy for me?
My plan does limit compensation to CEO’s. The reason I place the money toward the distressed homeowners is because it would be less expensive than $ 700 billion. If we “bailed out” these predatory lenders, it would send a signal that we will do it again.
The people who received these loans are not at fault. The banks told them (ME) that they qualified and that they would refinance these loans later, “No problem” they said. Then when it came time to do that, the banks said, “You don’t qualify”. My three year ARM was ABOVE prime rate at 6.76% to adjust to 8.9% in 3 years. Didn’t tell me that I couldn’t refinance before that without paying a $ 4000 penalty. These were predatory loans that consumers knew nothing about. Why would a bank lend me money if they KNEW couldn’t be paid back? I paid my loan on time every month + $ 50. Then tell me that I don’t qualify for a new loan? Because I put 30% down and they wanted my house to sell for a profit.