Credit Crisis – One Woman’s Solution

Emperors New Loans?

I feel a bit like the child in the “Emperor’s New clothes” story…am I the only one that sees the Federal Bailout as a smoke & mirror solution, leaving the American homeowner “naked” and possibly homeless? 

Ironically, in re-reading Hans Christian Andersen’s story from the 1800’s, the analogy is closer than I even remembered.   I’m afraid I’d cast the Emperor as our current administration, and the swindlers as the advisors from Wall Street (aka Henry Paulson and Ben Bernanke).

Perhaps my midwest roots are showing, and at the risk of being considered “simple”, here are some common sense solutions:

  • Put a moratorium on all foreclosures for primary residences for 90 days.
  • During that time have homeowners work with a new two-year “Save Your Home” program.
  • Create a two-year plan for homeowners to be able to effectively do a “work-out” with their lenders.
  • Any homeowner who has a “sub-prime” loan on their primary residence would qualify (ARMs, Negative Amortization, Balloon Payments, etc).   No homeowner who is fully informed would agree to these loans.  They were designed for investors who only hold their properties for a brief time. 
  • Offer a “Truth in Lending Audit” for the homeowner, but with leniency understanding that no one who is fully informed of the risks of these loans would agree to finance. 
  • Wherever appropriate, pursue legal action against predatory lenders and mortgage brokers who SOLD the homeowner the loan in the first place. 
  • Set aside some funds (minor part of $700B budget) to in-cent current mortgage holders to renegotiate loans on primary residences with current homeowners for the two-year period at rates between 5.75% and 6.25%, or whatever would be the “A” rate for a borrower in today’s market, regardless of their current credit score.
  • Require the lenders to roll-back the loan’s interest and legal fees accumulated during the past 12 months in the refinance of the primary mortgage balance.
  • Federally secure those loans during that two-year time frame.
  • Require credit counseling and classes to participate in this program (set aside Federal funds to assist in making these programs available).
  • Give the homeowner a two-year deadline to repair their credit, or sell their home to avoid foreclosure.
  • For homeowners in this program, require credit card companies charging interest rates above 6% to also roll-back interest and penalty fees, and “freeze” the balances or write-off a percent of the balance assisting the homeowner in repairing their credit.

In addition to helping families stay in their homes, these simple moves would:

  • Keep loans alive, creating health for the financial institutions holding the loans.
  • Support Credit Card companies financial health – preserving balances that otherwise are likely to be written off entirely in bankruptcy.
  • Infuse credit-worthiness back into the American public, benefiting consumers AND Wall Street.
  • As consumer financial health increases, the economy will likely dramatically improve based on financially sound, tangible assets, and old-fashioned financial health at the family level.

Solutions are just not that complicated – or necessarily expensive.  That is – if you’re taking care of the problem rather than financing Wall Street companies and executives.  Maybe our leaders need to think less like investment bankers, and a little more like Larry the Cable Guy – and ‘get ‘er done’!!

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About Susanna "Susie" Kunkel, RA

With a belief that life is too short to not follow your dreams, Susie and her daughter became new Kauai residents in less than 4 months after visiting for the first time in 2000. She brings a wealth of information from her background in administrative, contract and paralegal work in a variety of industries including technology, investment banking, biotech and estate planning. As a Realtor, Susies's tenacious and technical approach have earned her a large group of extremely loyal clients. Susanna is a steadfast believer in "The Golden Rule", and applies it to her approach as a Realtor. "Each client and each property are unique, so it's important to me to listen intently to what my clients' goals are, and to make sure I go above and beyond to help meet them."
This entry was posted in America's Credit Crisis, Foreclosure Prevention, Housing market, Kauai foreclosures, Kauai market updates, Short Sales and tagged , , , , , , , , , . Bookmark the permalink.

5 Responses to Credit Crisis – One Woman’s Solution

  1. Pingback: $700B Bailout, One Year Later « Kauai Real Estate Blog

  2. Pingback: Hawaii Foreclosure Rate Triples « Susie’s Kauai Real Estate Blog

  3. Pingback: Hawaii Foreclosures Rates Triple « Susie’s Kauai Real Estate Blog

  4. Tony Orlando says:

    Great Blog post. I am going to bookmark and read more often. I love the Blog template if you need any assistance customizing it let me know!

  5. I found your blog on google and read a few of your other posts. I just added you to my Google News Reader. Keep up the good work. Look forward to reading more from you in the future.

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