Monday, April 21, 2008

I have solved the National Foreclosure Issue-Pres. Bush please call me.

Currently we have many folks who are facing short sale/foreclosure who want to keep their homes but can no longer afford the new payments, so they come on the market as short sales/foreclosures. With each one of these cases coming onto the market, the overall situation only gets worse for the person selling after them and in the big picture, the national economy which will have to "clean up" the mess. So what do we do...

First, do the homeowners want to stay in their homes? If yes, then we need to find out what can they afford monthly payment wise under an FHA program. That will be the new loan amount. (Let me stop and explain a little more) They owe $400k, we refinance them to a new FHA loan amount which they can afford, $300k. (The new loan amount would have to be a minimum of 70% of the previous balance.)

So now what do we do with the $100k short fall? Instead of having a foreclosure to sell or a large short, the bank will be able to write the "bad debt" off their books and hold a $100k note. When the people go to sell the home a later date they will still owe that $100k back to the bank. Time will help the process. Currently, it is a race to foreclosure.

So the banks get to clear non-performing loans out of their portfolio, the real estate market will be much more stable with 1/3 to 1/2 less homes on the market that are foreclosures or priced for foreclosures, and the tax payers do not have to pick up a huge tab on a loan bailout.