Real Hope for America in a Real Solution Here we are, near the end of the first quarter of 2009, and we seem to be no closer to solving the economic duress that started many quarters ago. The first warning shots were fired over the bow when the two, now defunct, Bear Stearns funds imploded. I sit here on a daily basis, watching as all the key government officials offer up useless programs that do absolutely nothing to stem the tide and tackle the root problem where it lies, the consumer. They want to spend money on pet projects, using the situation as leverage, assuring us that all these programs will work. Meanwhile, the layoffs and foreclosures continue, in a spiraling negative feedback loop with no end in sight. The Fed has taken the stance of propping up financial institutions, sending check after check to companies that are reeling from the leverage applied to packaged mortgages. Why are these structures underwater in the first place? The first answer is leverage, but the key to this all is the consumers ability to pay back these loans, which leads to the point of how to stop this fiasco from going any further. So far the Fed has failed to apply water to the fire, they are attempting to keep the building down the block from catching on fire and even that is not working. If they are not careful, they will run out of water and the city will burn to the ground. Instead of pumping money into banks at near nil interest rates, taking these hemorrhaging assets as collateral, why not offer anyone with a current mortgage a 1%, 30 year fixed rate mortgage? Is it not the same thing? The obvious difference is it helps the root problem at the consumer level. Giving money to banks is not working; people are still having a hard time with their current terms. Allowing a consumer to refinance, immediately provides relief and shores up housing as foreclosures will largely cease. In this plan, the government will assume the note, which recapitalizes the lending institutions the proper way. The government still has the right to foreclose on non-performing loans, but how many people will walk on a one-time rate of 1%? For the people that are considering walking on notes because their houses are worth less than they owe, this is a game changer. You may ask how will the government afford to lend all this at 1%? Will they make any money at all? I would ask the question how much will the government lose to all the banks by taking on these failing assets as collateral if this program isnât made available? These assets will continue to erode until the consumer is given this type of relief. Everybody wins with this program. Without it, the tax base will continue to contract as we head further into a depression. This plan actually puts real money in American households pockets, money to pay off debts, money to save and invest and money to spend in the economy. For example, a $180,000 house that currently has a 30 year 6.5% rate, has a monthly note of $1,137.72. If that borrower opted in to this offer, that same note would be $578.95. That is a savings of $558.77 each and every month for that household, or $6,705.24 a year. That is real stimulus. This program does not give away free money, it still requires financial payment and responsibility, and will ultimately not cost the taxpayer a dime. It recapitalizes the banks by paying off the current notes as the government assumes the mortgage thus ceasing the destruction from leveraged losses. This in turn will free up available credit from lending institutions so people can once again borrow to start new businesses, grow existing businesses, make payrolls, and replace old vehicles. It is all as simple as an interest rate change to the consumer. This program stops the destruction of wealth, stops foreclosures and falling housing values and ultimately stops job losses as consumers are recapitalized; the consumers that represent 70% of GDP. But most importantly, this program offers real hope. Is Washington listening?