Time to consider the home, not the owner, as the object of public investment?
Maybe, to address the burgeoning mortgage crisis, we need to look at a different way to re-value these sliding home values.
Consider HOMEBOUUND long term low interest (5%) mortgages, that stay with the house even if when is bought and sold and changes owners...
Use the rest of the TARP money to turn those ARMS into 30-40 year SIMPLE INTEREST mortages that stay with the home, not with the person.
People could pay it off early if they found other financing, and could sell out to retrieve any equity they might build up, but the future could be made safer from these same mistakes by not allowing future borrowing against the equity of any house under a "homebound" mortgage.
Each new owner could assume the terms of that homebound mortgage, or they could buy out the government (public) stake if they have an alternative. Otherwise, they could assume the existing loan along with their commercial mortgage package, if it saves them money over the long run.
By tagging the loans to the home, not the borrower, the investment is made much safer, and that 5% simple interest is certainly a better return on our TARP investment than writing these off as a total loss or just throwing money at billionaires who won't use it to restore value to our middle class homes.
With the simple interest plan, the taxpayer would get their money back, with at least SOME interest, and the houses would all revalue to a stable level, and those homeowners would not have to be evicted. It could even be done retroactively for anyone whose home has not been sold out from under them yet.
I realize this is coming from an economic novice, and the experts among us may get a belly laugh from it, but it seems like something to at least consider.
JEP
