An Open Appeal to the President and the Treasury
The only solution for our economy is to FIX the mess regarding housing
PRICES.
The economy is suffering from the risk of foreclosures and the
inability of banks to properly value the mortgage assets on their books.
There is a solution.
Create a loan repackaging service at Fannie and Freddie.
Any borrower may ask to have their loan purchased by the repacking
service, but the service should only repurchase loans related to the
primary residence of the borrower or a home which had been the declared
primary residence of the borrower for at least six months following
January 1, 2007. If a home equity line or a second mortgage
exists on a home it must be included in the repackaging. Loans
aggregating more than $1 million per home shall be ineligible.
Loans to be repurchased shall be valued at the lesser of the
outstanding principal balance or 100% of the average of three
appraisals.
The existing mortgage servicer/holder shall NOT be required to sell the
loan (but the existence of the offer will create a market value for
marking to market purposes).
The borrower of a repackaged loan shall agree to add a deed covenant
granting the repackaging service 50% of the increased value of the home
as of the fifth anniversary of the date of the new loan not to exceed
the amount of the principal reduction from the original loan and the
new repackaged loan. The home can only be sold during these
five years subject to this secondary lien. The repackaging
service can sell the secondary lien to a new owner of the home prior to
the fifth anniversary date and to the original owner of the home (if he
or she is still the owner) on or after the fifth anniversary date.
The Treasury shall subsidize all repackaged loans such that the stated
interest rate for the first five years shall not exceed 4.5%.
New home purchases shall be offered immediate purchase of their loans
by the repackaging facility.
This plan will stabilize housing prices.
humbly offered
Michael Lissack http://lissack.com