I know … I’m often considered naive in my “political” opinions. Probably rightly so most of the time. After all, I’m just a hard-workin’ self-employed real estate broker out here in south King County, home of the working folks. Most of us go to work every day doing whatever it is that needs to be done and worrying about how to make our next house payment.
Like many folks, I’ve watched my house values erode drastically over the last couple of years. Perceptually, that fall in value seems to be speeding up .. or perhaps it’s just that now we’re all aware of what buyers truly are willing to pay for things. I’ve also watched, from the sidelines, interest rates fall drastically.
More disheartening, however, … at least to those of us who are self-employed … is that we don’t qualify to refinance our home, or for any of the nifty loan modifications, and wouldn’t even if our homes hadn’t lost value. Most of us write off everything we can on our income taxes making our bottom lines pretty skinny. But that bottom line is what is used by banks to determine our income — thus one step in our eligibility for a mortgage refinance, or even a loan modification. Our W2 income simply doesn’t support our true day-to-day ability to pay the bills. (Another one of my witticisms … “gee whiz, if my income is good enough for the IRS, it oughta be good enough for the bank!”)
So … for the last few weeks, I’ve been spouting my opinion about how to fix the economy. Here it is. Have at it:
Take ALL of the mortgages that are current and unilaterally lower their interest rate to the current market rate. Okay, I’ll even go so far as to say … lower them to the current market rate plus 1%. Period. No requalifying. (Afterall, I’m talking about “current in payments.”) Without regard to the current value of the home. Just give us all a ‘buy’ and get this over with. Make it effective, say, on December 1st.
No more messing around with “loan modifications,” and all that bank nonsense. Just get it done. Drop everyone’s payments down to today’s rates. Just do it. Get it behind us. Make house payments affordable for those folks who still own them.
Heck, maybe even take a good hard look at the reason folks are behind in their payments (I’m willing to bet one major reason is because their interest rates are sky high.) And perhaps give them a ‘buy’ as well. Forget about that pending foreclosure/auction for six months and see if they can make it at a lower interest rate. Write off all the past dues and late fees. Get it over with. Yes, I know this is a whammo for the investors that bought the loans for the banks. But so is letting this housing mess go on and on and on. It’s bringing everything else down, and there’s no sign of stopping. Fix the Housing Market, Fix the Economy!
I believe that stabilizing housing is far more important than jobs creation. Home ownership will always be an American dream. Let’s stop the nonsense and keep folks in their houses.
Interestingly enough, Moody’s had a proposal published just a couple of days ago in DSNews that was surprising similar … hmmmmmm (do you think someone is actually listening to my far fetched ideas?)
Fix the Housing Market, Fix the Economy. That’s my opinion and I’m sticking to it.