I’ve been following an idea proposed by John Watch of AccuriZ regarding how to rescue home owners during his mortgage crisis. What he says makes a lot of sense, so I want to try to help get the idea out. Maybe if enough of us start talking about it, we’ll see some interest from the Capitol.
A massive amount of money has already been earmarked for bailing out the banks. Yes, we are seeing the economy improve somewhat, but we need to find a way to stop the foreclosure hemorrhage. There is TARP money leftover and John proposes it be used as a LOAN to struggling homeowners – let them pay what they can but use the remaining money to keep them in the home. After seven years – which should be enough time for families to recover – they can start paying the money back to the government, thereby relieving the taxpayer of the burden of paying it back. It would not be a hand-out, but a short-term assistance program once called a Lend Lease program by Franklin Roosevelt.
John summarizes,
The reason it can work is because real estate goes through cycles. If people are forced to sell at liquidation prices, everyone loses. Give property owners a chance to get back on their feet, get back to work and the whole economy starts to turn around.
This is not perfect and many will complain about the injustice. But think about the injustice of the corporate bailouts, the injustice that first time home buyers get a break, the injustice that shareholders come before the individuals who created value in the companies by buying products. One can go on and on, or we can try.
I say why not try. No harm, no foul.
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