The Homeowner Bail Out

Yes, I am in favor of a homeowner bail out.

I was NOT in favor of the big bank bail out. Why? AIG sending its staff to an expensive retreat, after accepting $150 billion... Need I say more?

However, there are a LOT of ways that the government could help homeowners. Here's some random thoughts:

1. Lend homeowners enough money to redo their loans. Something like, original lender loan drops to the current value of the house, Feds lend homeowner enough $$ for a 1 to 3% interest second mortgage. And while they're at it, set up automatic payments according to the homeowners' paydays.
2. Matching funds, lender does a free refi, loan becomes a 30 - 40 - even 50 year fixed rate loan, Feds give lenders a matching amount of $$ for the amount the lender forgives on the loan. Naturally you would want a cap on this amount.
3. Drop interest rates. All mortgages drop off 2% on the interest rate, with the lowest rate being 5%, Feds give some fat tax breaks and incentive $$ to lenders.
4. Force lenders to allow homeowners to make bi-monthly payments, so it's easier to make payments according to the homeowners' paydays and budget.
5. Lenders forgive up to 3 months payments, get a tax break or incentive $$.
6. Don't let lenders do loans without an escrow account. That will stop lenders from playing games with the payment amounts. (I know this one, I was ASSURED that my loan would include the escrow -- well, at the last minute, when I was already committed and really had no choice, oops, that was wrong, didn't include the escrow. So I got screwed. Dude knew I was out of money, I couldn't start the process over with another lender. He got his commission and I got "did"...)
7. Freeze foreclosures for up to 6 months to give homeowners a chance to catch up, tack up to 6 months payments onto the end of the mortgage.

Naturally, all of these random thoughts should have limits. Lenders shouldn't have to suck up a 700,000 loan when the house value has dropped to 200,000. But they could refi the original amount into a lower interest rate, longer term, fixed rate loan. Why? Because if the homeowner sits tight for another 3 to 10 years, the house value WILL go up again.

But there are many, many ways that the Feds and the mortgage companies could help homeowners and at the same time, help themselves.

Why? Because if the mortgage market can be stabilized, the rest of the economy will also begin stabilizing.

The house of cards has already tumbled. Let's change the building materials back to brick and mortar and get our economy back on track.

I have to go now, time to get ready for work.

Think about it. In fact, think outside of the box.

This CAN be resolved without people losing their homes and the lenders not losing a lot of money. Stop saying "can't" and start asking "how"...