Tony Oday
09-30-2008, 12:53 PM
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?
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?