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Mortgage Solution for the United States

Mortgage Solution for the United States

 

Mortgage problems should be in part fixed with passive permanent grants.  Both local and federal grants should be made available to those that want help. Grants are not new, and have been tailored to meet challenges of our country in the past.   A grant program dedicated too homeowners that want help, and need help would have a positive multiplying effect on the entire nation, and world.  Changes in infrastructure needs, debt levels, population demographics, and sustainability all contribute to the need for more government grants.  

 Vermont a leader in progressive ideas has used a small scale passive permanent homeowner grant in selected environmentally considerate multiunit complexes to the benefit of all Vermonters.  Vermont requires those who want to apply to the program to take a financial education workshop, and also helps people straighten out past credit issues. Vermont is one of only two states in the nation to sustain housing prices in the last year.  The grant would stay in place forever as percentage of ownership in the property supporting the homeowner, home values, the entire community, all with a financial interest, and or moral interest.   

Struggling home owners could use this type of grant to regain their ability to contribute to the economy. Home owners could transfer partial ownership of their home to the grant program.  Homeowners, banks, realtors, appraisers, bondholders, renters, and the entire world would benefit.  Being progressive in dealing with struggling homeowners will help deal more effectively with fluctuations in the business cycle, and allow our government to show its commitment to being thoughtful of all.  

 So much of a home owner’s life goes towards paying the mortgage. This maybe impractical, and unsustainable in part because of increased efficiencies, limited natural resources, global competition, and an aging population.  Resolving this material weakness will be good for everyone, and increase flexibility of our economy to meet future challenges.

Currently small regional banks have been exempt from banking regulation of their mortgage originations.  Banks have relied on the under educated, and under informed customer to be their main profit source.   Enticing people with low introductory rates into products they could not realistically afford in the long term.  The lapse of regulation that has occurred continues to contribute to the housing problem, and now threatens to hurt the entire economy.  All Banks need to be regulated in all areas to ensure fair treatment, and pass along increased efficiencies to society.

Further regulation of mortgage brokers will only work if all banking is regulated.  Brokers’ help customers get into programs created by banks.  If banks can do anything then increased regulation of brokers will be ineffective. Rates of profit allowed should be tighter on brokers because of increased efficiencies in recent years.  Government needs to from time to time pass along efficiencies gained by business/society to the consumer.  Too address and eliminate a weakness of capitalism.  

Rates of profit allowed should be lower in particularly on teaser rate mortgages, adjustable rate mortgages, stated income mortgages, and interest only mortgage programs because of the increased risk to bondholders who take on this debt.  Additionally smaller profits on questionable programs would encourage brokers to put customers in the right mortgage product for the customer.  This can be done by slight modifications to laws already in place by states, and the federal government.

Mandate all adjustments in rates to be indexed to too the federal funds lending rate. Rather than indexes that have the potential to distort adjustments materially higher. To ensure maximum multiplier effects by federal policy. To increase transparency of investments’ in mortgage bond; hence, helping all investors be able to make better decisions.  

Prepayment penalties on mortgages need to be reduced, and morally applied to everyone alike.  I would suggest no more than one year to reflect the increased ease at which mortgages can be created, and to not unreasonable slow down transactions of home investors. To fill a loop that unfairly sets up teaser rate borrowers to large pre-payment penalties that can erode equity in homes.

Passive or active government grant type owner ship in all banking comparable to what is already in place with large federal banks could be used to help banks retain market value, continue to work to improve efficiencies, and better align there moral values with everyone in society.  Government intervention would ensure the sustainability of the banking industry despite continuing unforeseen changes in their role.  Banks need to be better able to make more thoughtful decisions without fear of going out of business.     

Handling this sensitive issue quickly would be prudent to show Americas’ ability to respond quickly to changing information.  Permanent grants can be used by individual states, entire United States, the world, and or any area of human concern. I hope to continue to share my understanding on other issues our nation faces in the future.

   

October 22, 2008 Posted by | American Politics and Policy Ideas | , , , , , , , , , , , , , , , , , , , , , , , , , , | Leave a comment