How to Fix The Economy, Create Jobs, Stimulate Spending, Stabilize The Housing Market, and Reduce Foreclosures
This article will attempt to deliver a plan by creating a ripple effect to stabilize the economy, stimulate spending, stabilize the housing market, and reduce foreclosures by implementing a new mortgage product. It is a high risk maneuver, and debatable in its validity, but I believe it will work.
In it's simplest form, a Reverse Mortgage is a negative equity mortgage program through the FHA for senior citizens over the age of 62, where there are no monthly mortgage payments, and borrowers have access a portion of the equity in their homes to spend for their financial needs. There is no credit requirement, no income requirement, and no employment requirement. What if there wasn't an age restriction? What if anybody was able to get this program? What changes would be needed to make it a viable product? What effect would it have?
In order to reverse this trend, the focus needs to be on reducing foreclosures. But how is this done with 10% unemployment, and homeowners unable to maintain their expenses due to lost wages? Simply by creating a new mortgage product that addresses the needs for these situations. For additional reference material, please visit my other article that explains how to understand a Reverse Mortgage.
Key Results of the new reverse mortgage product:
· Stabilize the Housing Market.
· Reduce Foreclosure Rates.
· Stimulate the Economy.
· Simulate Job Growth.
· Generate a New Revenue Stream for Investors.
The first step is to understand the economic climate we are experiencing, and to briefly outline how the issues are directly related and affect each other. This is a very basic explanation, and there are definitely more complex working parts within it: High risk loans were implemented by sub-prime lenders, borrowers were unable to repay their debt from high interest rates, they were foreclosed on, the high volume of foreclosures lowered real estate values nationally, homeowners were unable to sell for profit, homeowners lost equity, the housing market collapsed, major banks collapsed, construction ceased, spending ceased, jobs were lost, companies lost revenue from lack of sales, more jobs lost, more companies closed.
The ability to cash out equity in a lump sum, receive monthly payments, or line of credit in combination with the absence of any housing payment obligation will allow borrowers to use a greatly increased amount of disposable income for the purchase of goods and services. With such a vast difference in budgetary restraints, it will allow for an unprecedented economic growth in the United States.
With a Reverse Mortgage, the borrower will have no monthly payment obligation. This will result in a complete cessation of non-payment default loans, and stave off all potential foreclosures for those borrowers that qualify. The reduction of which will result in stable home values, and appreciation of neighborhood areas.
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