We all know that without the revival of the real estate market the economy cannot enhance as much as we would like it to. Being a real estate and mortgage broker for the past 26 years i have come up with this clarification that benefits roughly everyone. This may be the biggest transaction of my life, without pay, but it will help the economy and the country.
In the next 5 minutes I'll show you how my stimulus box costs nothing to implement, raises real estate values, creates jobs roughly instantly, and makes money for the banks and the government in less than one year.
Underwater Properties: an underwater asset is a asset that its owner owes more on the asset than the asset is worth, but, he or she wishes to keep the property, still has a job but has suffered a reduction in income, can afford a modified loan and wishes to occupy the asset as his/her personal residence. Sample property:
Home value = 0,000
Combined loan number on the house (the sum of 1st, 2nd, or even 3rd mortgages) = *0,000
Underwater number = $ 50,000
Solution:
Refinance: Banks to Streamline Refinance the whole 0, 000 @3.75% yearly interest rate payable interest only for 10 years and then convert into a 30 year amortized loan.
Trust Fund: create a Mortgage assurance Trust Fund where assurance premiums are deposited. Government to insure the underwater number plus 20% of the total loan by imposing a one-time fee equal to 2.75% of the loan number as an insurance, like the mortgage assurance companies did. This fee to be paid by the bank to the government and be added to the loan not to burden the borrower to come up with it in advance.
Example: Loan number 0,000 asset Value 0,000 Underwater number $ 50,000 Mortgage Insurance= 2.75% of ,000 + 2.75% of ,000 (20% of 0,000) = ,475. This method insures the Mortgagee the Underwater number plus a 20% to compensate for the 20% down payment ordinarily required while a purchase transaction.
Personal Guarantee: Borrower signs a personal warrant for the loan for a 3 year term, after the 3 years have passed the asset remains the sole collateral for the loan.
In the event of the borrower's default, this assurance pays for the unlikeness and covers the bank's losses.
The number that the government pays to the bank, if the borrower defaults within 3 years of the refinanced loan, becomes a personal loan to the defaulting borrower, a personal loan that survives bankruptcy, just like learner loans.
Assumption: The new loan to be an assumable loan to distinguished buyers. The Bank may payment 1% of the loan number as a replacement fee, plus a set 0 Combined Processing and Funding fee and 0.5% of the loan number for escrow and Title fee. The bank may (at its own discretion) ask for, accept, or reject a physical inspection report showing an appropriate health of the asset to the lender.
Prepayment: The loan to have a no prepayment penalty clause.
Credit Report: As an supplementary incentive, finance companies or banks must remove derogatory reputation from reputation reporting agencies for borrowers who qualify and obtain such loans at new terms
Annual Interest rates to be fixed at 3.75% for conforming and 4.125% for jumbo loans.
Foreclosed properties: Foreclosed properties are properties that the owners ultimately had no way of refinancing, and not adequate wage to sustain their mortgage even if and when modified. They chose to let go of the property.
These properties are a major burden on the banks that had the financing for these homes and the real estate market in normal because they are causing a major over-supply of properties which, in turn are devaluating whole neighborhoods. Solution:
1. Government to purchase foreclosed asset from bank at loan value. This will clear the banks from its books to allow for new financing. Offer said asset for lease with the following conditions to promote and incentivize potential tenants:
Offer the asset on lease with an option to buy at a predetermined price which should equal the total of the cost of the government purchase of the asset from the bank plus 10%, for example: asset cost the government 0,000 to own, the price for the tenant to pay in the event tenant wishes to purchase this asset within the 3 year term offered to him will be 0,000 + ,000 (10% of 0,000) = 0,000.
2. reputation all lease payments made by tenant towards the down payment if tenant chooses to remain in the asset and finally purchase the asset within 3 years. Tenant forfeits this right if he chooses not to buy asset within the 3 years duration and all money paid remains past or paid rent.
The term of the lease to be 3 years or less to qualify for the credit. This will warrant that government money is not lost; actually, it is production money and taking a lot of catalogue out of the market while helping owner occupancy.
3. Damage To asset due to foreclosure. Any borrower, who leaves or abandons his or her property, or lets his or her asset go to foreclosure, must hand over the asset in a normal wear and tear condition. No supplementary damage should be made to the asset blaming the bank as the cause for the foreclosure and that revenge is in order, such as: pulling drywall from the walls, pulling out appliances, causing plumbing damage, inflicting roof damage, or doing whatever that is out of the ordinary. The government will be authorized to place a personal lien on the owner who caused these damages either the bank or the government end up fixing it to bring the asset to its normal condition. Damages expensed to borrower are to survive bankruptcy protection. Excess money in borrowers' pockets will incentivize him/her to spend more. This spending will cause businesses to hire more employees and get the ball rolling. The examine created will tighten supplies which, in turn will create a moderate inflation, increase asset valuation, and finally lead to higher rates and increase the Gdp (Gross Domestic Product).
It is Not a hidden that When the Real Estate market Improves the economy Improves.
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