15 Reasons to Bailout Homeowners Over Banks
September 28, 2008
America, like congress, is split on how or if we should spend a trillion dollars to save our economy. ROOPA presents these 15 reasons to see if we can find a greater degree of common ground between both Republicans and Democrats as well as Wall Street and America’s Home Streets. Whether this is taken up as a final proposal is secondary to presenting important considerations overlooked so far in the discussion such as the $500 billion in Wall St. write-offs that will be reactivated by simply refinancing the homeowner.
(PRWEB) September 27, 2008 — America, like congress, is split on how or if we should spend a trillion dollars to save our economy. ROOPA presents these 15 reasons to see if we can find a greater degree of common ground between both Republicans and Democrats as well as Wall Street and America’s Home Streets. Whether this is taken up as a final proposal is secondary to presenting important considerations overlooked so far in the discussion such as the $500 billion in Wall St. write-offs that will be reactivated by simply refinancing the homeowner.
This is sponsored by ROOPA under its Save Our Homes March effort that has been activated specifically for this occasion and headed and footed by Mr. Raghu Giuffre. This will culminate with ROOPA’s Sept. 28th Day of Prayer for fellow homeowners with a 12 noon rally at Thompson Square Park in NY City. This occasion will be observed with a fast from food, water and man-made shelter by Mr. Raghu Giuffre in solidarity for America’s homeowners.
This will be preceded with a trip this Fri. and Sat. (Sept. 26 and 27) to Washington DC, wherein Mr. Raghu will present this proposal to congress and assembled media. This will be followed by an internet march wherein ROOPA requests that readers ‘march’ (email) this presentation to 10 of their friends, who in turn also share it with just 10 of their friends along with their local and national media and political leaders. ROOPA’s hope is to have a assembled a million notices (sent) to congress and the national media within the next couple/few days.
1) Bailing out homeowners will immediately reinstate up to 80% of the $500 billion already ‘written off’ by Wall St. as ‘toxic loans.’
(Recoup lost value by refinancing homeowners rather than bailing out banks. Gov’t puts in $500 billion and instantly gets back $500 billion in new market value. Better return than bank bailout)
2) Double or triple value bailing out homeowners then banks.
(Bailing out homeowners refinances 100% of loan thereby giving banks 100% value on corresponding securities holdings. If securities sold to gov’t, only get 30% to 50% of value.)
3) Refinance 5 Loans for same price as one ‘toxic loan.’
(Get 5 times greater market reach for the same money)
4) $700 Billion (bailout) can instead be used to refinance $3.5 Trillion in real estate loans. Transform all ‘toxic loans’ into income producing assets for banks.
($1 trillion bailout will equal $5.5 trillion in refinancing. Gov’t recoups up to $200 billion in taxes from sale of properties and their corresponding securities. Fredie, Fanie Mae & AIG and all mortgage holding institutions fully refinanced returning $300 billion in loans made to them by fed. The $500 billion will be fully recouped by gov’t. within months over today’s bailout proposal which is likely to lose $.)
5) Refinancing owners will stabilize entire real estate market
(Market settled in 60 to 90 days. Bank bailout only makes problem worse by foreclosing on owner)
6) Two market prices: Homeowner (for 80%) vs. Investor (just 20%)
(Sell foreclosure to investor for 80% less or refinance homeowner for just 20% less. Get 60% more $ by refinancing to homeowners over foreclosure.)
7) Higher price (refinancing home owner) keeps lower priced owners in home
(A Higher Price Tier creates equity for Lower Price Tier homes. However, a lower market price creates next wave of foreclosures because no equity left for lower priced homes either. Real estate’s Tier Down or Tier Up Pricing Principle discussed in next article)
Higher price sets ‘Market Bottom’ at a higher Pricing Tier
(The ‘market bottom’ can only be set at the neighborhood level, not Wall St.)
9) 30% to 70% greater monetary return
(taxpayers now own these mortgages so get better returns helping homeowners vs. banks)
10) Properties paid off months or years sooner than foreclosure process
(Many foreclosed properties never resold, so often lose 100% value therefore banks only get 20 cents on the dollar. Refinance homeowner at 20% discount, only lose 20%. We finally know market bottom and find it months or years sooner)
11) Lower monthly mortgage leaves homeowner more likely to pay on other debts & taxes providing equivalent of stimulus package too.
(Refi homeowners with lower mortgages will help other distressed industries like credit cards, student & auto loans, local & state taxes, etc. Great stimulus package, but will lower inflation for it reduces owners debt by 30% while giving them 30% more spending power. Dollar rises, gas & food prices fall.)
12) Foreclosure leaves owner defaulting on all other debts
(Helping homeowner helps all other industries, while losing home owner hurts all other industries. Bailing out auto industry, banks or student loans will not save industries, only buy them time.)
13) Entire family also defaults on all other personal debts
(One foreclosure = 4 People defaulting - wife, kids, grandma - on all other debt obligations)
14) Greater public support for homeowner then banks
(Finally a program that can win both public & bi-partisan support quickly)
15) ‘Two for one’ deal: stabilize banks & real estate market for same $
(vs. only buying banks a few months of time as Pres. Bush’s plan would do.)
ROOPA ends its list with these thoughts: “Secretary Paulson referred to homeowners as the ‘root cause’ of this economic crisis. Simply water the root and the rest blossoms naturally. We will have stabilized both markets (financial & real estate) for the same price as stowing away this first wave of foreclosures. The moral: Wall Street’s value is but a reflection of ‘Home Street’s’ value. Banks therefore get more by helping the home owner then by us helping banks. Today, that truth is revealed in unmistakable clarity. Continue to ignore our American family and our problems will only multiply,” Raghu says.
10 West ST. Apt. 21E, NY NY 10004, ssriraghu@yahoo.com (roopa.org) 808 277-1120
http://roopa.org
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Comments
One Response to “15 Reasons to Bailout Homeowners Over Banks”
Most Americans are deeply opposed to this bailout. But it seems like
congress is going to do it anyway, “to save us”.
If we taxpayers are going to be paying the bill, shouldn’t we see some
benefit from it too?
If they are going to spend the money, shouldn’t they spend it in the way
that helps the most people?
What $700 billion to $1 trillion could do:
Instead of giving the money directly to the banks, the gov could send checks
for $14,000 - $20,000 to every single owner occupied home in America with a
mortgage. These
checks could be made out directly to the mortgage companies. So people could
not use it to go out and buy a car or a mink coat. The checks could only be
used to pay down an existing mortgage.
The banks would be getting the full $700 billion to $1 trillion that they
want. But it would pass through our hands first. They are spending our money
on the bailout. At least let us touch it for a few seconds.
This would:
1. Rescue the banks from themselves. (they still get bailed out)
2. Rescue private investors of mortgage securities. (they still get bailed
out)
3. Give people who are 30 - 90 days late a reprieve. They will be caught up,
and gain equity. $20,000 is more than a year of payments for most people.
(this is a bonus benefit, at no additional cost)
4. Builds equity for those who are not behind, by paying down their mortgage
by $20,000. (this is a bonus benefit, at no additional cost)
5. Removes negative equity for many home owners. People who owe $200,000 on
their $180,000 homes would now be able to sell them for the $180,000 value,
without going bankrupt. (this is a bonus benefit, at no additional cost)
6. Provide a soft deflation of home prices, rather than a crash in prices.
(this is a bonus benefit, at no additional cost)
7. Grease the economy. Those who are not behind on their mortgages and
already have equity built-up in their homes, will have even more equity.
These people will be flush with cash and will spend it on cars, washers,
dryers, etc. (this is a bonus benefit, at no additional cost)
8. Expose the mortgage brokers and banks who issued fraudulent loans. If 60%
of the “customers” of a broker or bank “don’t send their checks in”, they
can be looked at for fraud. Then they can be put in jail. (this is a bonus
benefit, at no additional cost).
We would all get a giant do over, instead of just the banks. We are the ones
paying for it anyway. Why should we pay the full cost of our mortgages, and
pay for the bad ones too?
Any banks that can not make it after this massive inflow of cash, they
deserve to fail.