History has shown us that our Nation, eventually, meets every crisis with creative new ideas and bold action.
Here is an idea that will reduce the national debt while stimulating the economy, creating jobs and helping banks get their house in order. And yes, it is possible to achieve both.
The Idea: Government encourages home mortgage owners to take advantage of historically low interest rates by refinancing existing mortgages to cut monthly outflows of personal cash. The Government encourages this with a Cash-for-Cash 2011 Tax Credit or, a government direct Grant for the closing costs up to a fixed percent (so banks can’t raise fees to extract the value of the program).
How to pay for it: The mortgage owner would re-pay the grant (or tax credit) over a ten-year period plus a small interest payment.
Protecting against unintended consequences: This program would be limited to the remaining balance on the mortgage. No leveraging up or using it to speculate.
Who wins:
- The homeowner wins: They don’t have to come up with the capital to re-finance and they get lower monthly costs. This gives them more money to spend which drives the economy.
- The Government: We (the government) get lower defaults because people don’t walk away from homes. We get our Grant or Tax Credit back over time, with interest secured by homes with people actually living in them.
- The Banks win: They get fees (fairly priced), and the mortgage now on the books (probably shortly sold) is of higher quality because the payment is lower
There ARE things we can do to navigate this crisis. We need new ideas and clear thinking in lieu of career politicians maneuvering for advantage. If you have ideas, let your elected officials hear them. Push them into thinking about the power of new ideas. When leaders aren’t leading, the population must come forward…..
