$700 Billion

[Tony Oday]

Ok Im not saying I have a phd or MD or anything like that, I am using a calculator and just some numbers from the wall street journal.

As of May 2008 there were 245,000 (rounded up) homes in one form of foreclosure in the United States. With the median price for a home in the US at $196,300 per the NAR in the 1st Q of 2008 and $700 billion to spend why doesn't the US government instead of giving this cash directly to the companies that threw the money away in the first place just buy the houses directly?

With the current bailout package of $700 billion that would be $2,857,142 per house. That is a bit more than the median price! Instead lets invest $70 billion and purchase these homes...the lenders that sell these foreclosed assets should be happy to recieve 70% of the value of the home regardless of the mortgage attatched to the house. That is $137,410 for each home. In this that builds in the cost to actually refurbish the homes...which most need to that are foreclosed on...and administer the program.

What would the US government do with these homes you ask? Well first of all we could creat section 8 housing for people so not only does the government get an actual asset, not a complex financial concoction that not even the bankers understand, but would also get money back from rents paid by the tennents. Section 8 could be expanded to reach more people because the homes would be a free and clear asset. You use the money paid for by rents to go 10% into running the program, 20% into the upkeep and taxes and the 70% into paying the "mortgage" aka the bailout.

This would free up the credit that banks need to lend companies because these dead weights would be lifted from their books. It would increase housing prices simply by Supply/Demand economics and would provide a great way to help out the less fortunate people in the US while still providing an investment to the taxpayers.

I mean what is wrong with this solution?

[bobblehead]

the housing market is a symptom, not the problem.

[rdanomly]

the housing market is a symptom, not the problem.

What problem do you think it is a symptom for?

[bobblehead]

its a symptom of allowing subprime securities to be marketed as mortgage backed securities which came about due to pressure by the feds to have banks give mortgages to people who couldn't afford them. Now the BIG symptom of a frozen credit market is what we need fixed or else expansion grinds to a halt and will cost mega jobs.....but how do we get our confidence back?

[Tony Oday]

So basically you are saying that we should undo the ACORN pushed subprime mess, which I agree, and this would take the unperforming securities off the market and protect the taxpayer with actual assets.

[LL2]

What would the US government do with these homes you ask? Well first of all we could creat section 8 housing for people so not only does the government get an actual asset, not a complex financial concoction that not even the bankers understand, but would also get money back from rents paid by the tennents. Section 8 could be expanded to reach more people because the homes would be a free and clear asset. You use the money paid for by rents to go 10% into running the program, 20% into the upkeep and taxes and the 70% into paying the "mortgage" aka the bailout.

A lot of these homes are in nice neighborhoods. Creating section 8 housing in most neighborhoods would piss people off more than this failed bailout deal.

[Tony Oday]

I understand that and I am saying section 8 because that is what is around. There could be a different agency...literally no idea what the criteria is for these houses however just because a person is section 8 doesnt mean they are ghetto.

[HowardRoark]

How about this idea.

We have around a million homes that have to be owned by people who can actually afford them. Not smoke and mirrors. It will take a long time for all of this inventory to work through the system.

How about we find a million families of well educated (advanced degree, PhD, etc) foreigners who want to become citizens? They also have to show that they have at least $500,000 that they will bring with them. They can come over and buy a house and become a productive member of our society. For that, we will accelerate the citizenship process.

I am not sure how long I takes to become a citizen (MJZiggy always seems to know this stuff), but we can step up the process. And, we get the benefit of their productivity an brain power.

[bobblehead]

So basically you are saying that we should undo the ACORN pushed subprime mess, which I agree, and this would take the unperforming securities off the market and protect the taxpayer with actual assets.

I'm not sure what I'm saying..I hate to admit that I'm at a tough decision. I don't like gov't bailouts for people who were given a loophole for a specific purpose and then proceeded to abuse the fuck out of it, but I do recognize the need for an unlocked credit market so large job producing projects can continue. Again, a large part of this is a confidence problem ala the great depression run on banks.