1. Government Subsidized/Mandated Mortgage Interest Rates
Lower Thirty Year Fixed Rate to 4%
All of the people who want purchase a home but haven't yet -1st time home buyers, procrastinators, people still waiting for prices to come down - would seriously reconsider if they new they could get a rate of 4%. Even the people who were responsible and have good credit and equity would pick up the phone to refinance their loan. This will last for 18 months - anyone that wants to refinance into this and can qualify, can apply.
2. Government imposed 18 month moratorium on all primary residence foreclosures. This will help to put a stop to plummeting housing prices due to short sales and foreclosures. I think we can all agree that for the most part, the lenders don't want these houses back anyway; so they are not losing buy not taking back these houses. Also, this will keep people from abandoning their house after receiving a foreclosure notice.
3. All lenders must modify all primary residence loans (1st and 2nd mortgages) to an affordable payment for the borrower (for those who apply). We will use 31% debt to income ratio as definition of affordable. (monthly p.i.t.i payment divided by monthly gross income)
If modification results in principal reduction - so be it - no future shared appreciation. My reasoning: if they will short sell and take the loss, then they will modify and take the loss, end of story. Go out and make new loans to recoup the money. That's what I'm gonna do.
This is about as simple as it can get, and this will get the economy going again. If people see that they can get a rate of 3.5-4% on a 30 year fixed, they will start to buy and refinance again. This will create jobs through a ripple effect, as well as help to put a bottom in on the housing market by creating demand.
Posted by Joseph P. Mazzei at www.mymortgagebroker.blogspot.com
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