Hey, Mr. Barney Frank, Here is a Better Mortgage Idea

November 18, 2008 in credit, Personal Finance
Tags: bailout, Barney, economy, FDIC, Frank, genius, home, idea, market, mortgage, paulson, politics, treasury

Currently, mortgages are traded between banks and financial institutions like (as) securities, generally in large bundles, but still traded.  The current market prices that these trades are taking place at is currently between $0.18 per $1.00 of face loan amount and $0.28 per $1.00.  But yet, if I or you wanted to pay off the mortgage, we would have to pay the face loan amount plus interest.

Here is the BETTER IDEA.  Let the mortgagees (the homeowners) buy back the mortgage at the current market price of the mortgage. Let them buy the mortgage at 18 to 28 cents per dollar of loan amount.  They can thus cancel the loan that the now owe to themselves and they can then refinance that amount with a full recourse loan, rather than a non-recourse loan, or maybe even a loan guaranteed by Uncle Sam.  This would keep people in their homes, allow a fair playing field, and help the banks monetize their balance sheets.

There are several countries that have programs like this (no I am not a genius) and none of them are facing the situation like the great US of A is facing today.  We must use the markets to solve the problem and this does exactly that!

Spread the word!!!  Let me know what you think….