The ‘Other Way’ To Rid All ‘Toxic Loans’ (Part II)
Pay Down Home Owner with 40% rather than Bank with 80%
The ‘OTHER WAY’ to get rid of all ‘toxic loans’ (besides bank bailouts) would be to refinance all ‘underwater’ homes (that owe more than they are worth). No More ‘Underwater Homes.’ No More ‘Toxic Loans.’
(Refinancing homeowners is described in Part I: Banks & Insurance Paying off Same Loan.’
The benefits of refinancing homeowners (in place of banks):
• It cost about 5% to 10% the price (of the TARP program).
(It cost less because the money is coming from the banks ‘write-down’ rather than the gov’t. as explained in Part I)
• It’s paid in just weeks (or the time it takes to refinance owner) rather than years (as required by TARP).
• All the securities are paid in full (because bank is paying the difference upfront).
• Banks are refunded with rebates of 30% to 70% on their securities (excessive write-downs against the 80% loss on those securities in today’s market).
• Insurance companies have no more real estate liability (worth 26 trillion in outstanding obligations).
• And it’s a market based solution rather than a gov’t takeover of the banking and insurance industries.
Helping homeowners over banks cost less, it’s a lot faster, and much more profitable.
ACORN just released a report giving us the best news of all: both banks and Washington have now committed to refinancing most distressed homeowners anyway. They even have the money budgeted to do so. There is no need for further legislation or money. Just show banks & Washington this ‘secret’ of the mortgage duplication (as described in Part I). The world will finally see the bottom of this problem and all the value just waiting there for us to tap.
