Jason's idea to rescue our economy

THE AMERICAN HOMEOWNER RESCUE PLAN


There are a multitude of factors contributing to our ailing economy here in the United States, but if we could simplify the problem, would we find a simple solution? In my opinion, the root of this gigantic problem is that the average American has borrowed excessively and is financially backed against a wall- unable to borrow anymore, unable to spend anymore, unable to save enough anymore.

A lot of these people own homes that they want to sell and start over again, but sadly they cannot. Because they cannot sell their homes, they cannot escape the burden of their excessive debt. This affects not only the quality of life of the homeowner, but it has also slowed consumer spending greatly, and strangled the banking system. There are over 4 million homes for sale in the U.S. Obviously, this is a far higher inventory than normal times. Approximately, 3 million of these homes are owned by regular families who are not delinquent of their mortgage payments and could easily qualify to purchase another home- IF they could sell the one in which they currently own.

If these “qualified” homeowners could sell their homes, they could be the very people that lead this nation out of this economic disaster. How do you ask? Please read these 5 steps:

STEP 1

The U.S. Treasury should use $100 billion from the approved TARP to buy 500,000 homes that have been on the market prior to November 2008 at an average price of $200,000 (the median home price of U.S. homes). These 500,000 homes must be owned by people who agree to buy another home within 90 days. Foreclosures or un-credit worthy owners would not be eligible. Developers and Corporations would not be eligible. Only credit worthy homeowners would be selected from a lottery in all fifty states. Let’s call these qualified people- “Patriot Homeowners”.

STEP 2

The Treasury would take the 500,000 units off of the market and out of inventory for at least 3 years. The Treasury could sell these homes when the economy recovers to more historical norms- possibly with very low interest mortgages as incentive. The U.S. taxpayer would recover its $100 billion for these “Patriot” homes.

STEP 3

The second round of 500,000 homes bought by the “Patriot Homeowner” would free up 500,000 more homeowners to go buy 500,000 more homes that are for sale. This “domino effect” would result in 1.5 million units taken out of the inventory in a very short period of time. The “domino effect” would hopefully continue as each round of 500,000 homeowners who are freed from their strangling mortgages to move into more affordable homes that are located where these people prefer to live.

STEP 4

The inventory of U. S. homes for sale would rapidly return to a normal supply. Natural market demand would then be able to better reach the inventory of the foreclosures, developers and real estate corporations. This would not only benefit these groups of owners, but it would relieve some pressure from the banks that have made the loans to these entities.

STEP 5

Homeowners that get the opportunity to move into new, more affordable mortgages as a result of selling their homes and making smarter purchases into different houses, receive another benefit of having more disposable income. This would help every area of the economy- retail, autos, finance, consumer discretionary, real estate, education, and many others. The banks would essentially be rescued because the result of real estate sold would be proceeds returned to their balance sheets. Homeowners who are in danger of foreclosure would have a better chance of escaping. This also benefits our fragile banking system. Most of all, it gives America the second chance it needs to obtain debt that actually fits its income and equity profile.

For those who would question if rapid reduction in house inventory would cause home prices to return to bloated values, the answer would come in the form of much greater regulation to assure lenders set proper loan values.

Please relay this plan to as many people as you can- your neighbors and your government representatives. We have to act with lightning speed. An economic nightmare could be coming. This solution can greatly help and possibly fix this giant problem. Most of all, it will give us all a much needed second chance to buy the American Dream, but this time at a smarter price that leaves us more money at the end of the month to give, spend, or save.



Jason R. Peck

C- 770-540-2681
H- 770-535-2821