Monday, October 6, 2008

The Problem Is Still Falling House Prices

A successful plan to stabilize the U.S. economy and prevent a deep global recession must do more than buy back impaired debt from financial institutions. It must address the fundamental cause of the crisis: the downward spiral of house prices that devastates household wealth and destroys the capital of financial institutions that hold mortgages and mortgage-backed securities.

...
We need a firewall to break the downward spiral of house prices. Here's how it might work. The federal government would offer any homeowner with a mortgage an opportunity to replace 20% of the mortgage with a low-interest loan from the government, subject to a maximum of $80,000. This would be available to new buyers as well as those with mortgages. The interest on that loan would reflect the government's cost of funds and could be as low as 2%. ...

Consider a homeowner who has a mortgage equal to 90% of the value of his home. The 15% decline in the value of his house that may be needed to bring it back to its prebubble level would shift that homeowner into negative equity. Further price declines would make default attractive. But the 20% mortgage replacement loan would take the loan-to-value ratio to 72% from 90%, making it unlikely that prices would fall far enough to push him into negative equity. An interest saving that could be as large as $3,000 a year would provide a strong incentive to accept the mortgage-replacement loan, even if the individual thinks that he might temporarily have a moderate level of negative equity.

We have now introduced our newest program that provides you with Private Funds
to use for Flipping Short Sale Transactions. Line up a prequalified buyer
and our Investor can provide the Proof of Funds and the Cash to buy the
short sale from the Bank.

Cost of Funds is 1% plus $300 flat fee all paid from your profits at closing.

Buy a home worth $200,000 in a short sale for $100,000 and resale for $150,000.
You keep $50,000 minus 1% (1,000+$300 flat fee).

... http://www.fastbuyerloans.com

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