Tap hidden market value by helping American family
Secretary Paulson referred to homeowners as the ‘root cause’ of this economic crisis. Simply water the root and everything else will blossom.
Helping homeowners will allow us to stabilize markets (financial & real estate) for the same price as stowing away this first wave of foreclosures. The moral (lesson) of this crisis: Wall Street’s value is but a reflection of ‘Home Street’s’ value. Banks therefore get (a lot) more by helping America’s small town home owner then by us helping big city banks. What’s good for Home Street America is good for Wall Street International.
Today, this truth of the American family as the hub of the global economy is finally revealed in unmistakable clarity. Continue to ignore our American family and the whole of the global economy will fall. Help Mom and Pop and everything else will prosper.
We offer 15 examples how everyone prospers by helping our everyday homeowner. The underlining theme is simple: there is significantly more value to be tapped throughout the market. We can easily recover most of this market value by running the money through the mortgage system again by refinancing the homeowner. A banking bailout will only flush away this hidden value and be lost for good. These considerations should help broaden the discussion in a way that finally expands our options rather than leaving us cornered again into another short term fix (non)solution.
1) Bailing out homeowners will immediately reinstate up to 80% of the $500 billion already ‘written off’ by Wall St. as ‘toxic loans.’
(Recoup the lost value already written off by Wall Street over the last year by simply refinancing homeowners. Banks get a lot more money running this money through homeowners then by circumventing them once again. Gov’t puts-in $500 billion and instantly gets about 80% of this $500 billion in lost market value. In contrast, Paulson’s bailout plan would wipe out this entire value.)
2) Double or triple the value bailing out homeowners then banks.
(Bailing out homeowners refinances 100% of loan thereby giving banks 100% value on their corresponding securities holdings. In contrast, if these securities are instead sold to the Fed; banks will only get 30% to 50% of the securities value. Banks will make more sending this bailout money through homeowners then if banks get a direct bailout.)
3) Refinance 5 Loans for same price as one ‘toxic loan.’
(We get 5 times greater market reach for the same money. This means we can handle 5 times more ‘bad loans’ then Paulson’s plan.)
4) $700 Billion (bailout) can be used to refinance $3.5 Trillion in real estate loans. Transform all ‘toxic loans’ into income producing assets for banks.
(A $1 trillion bailout would equal $5.5 trillion in refinancing. Gov’t recoups up to $200 billion in taxes from sale of properties and their corresponding securities. The Gov’t will also recoup the $400 billion in ‘loans’ provided to AIG, Fanie & Fredie Mac and all the other institutions going/gone into bankruptcy. The $500 billion used for homeowners will be fully recouped by gov’t. within months from these taxes and refunds alone. Paulson’s bailout will take decades before it could ever recoup anything. Many expect that much of this bail out money will be lost.)
5) Refinancing owners will stabilize entire real estate market
(Refinancing $5 trillion in mortgages will settle much of the real estate markets within 60 to 90 days. The bank bailout only makes problem worse for it fails to stop the downward spiral of dropping real estate prices of the coming 4 million homes now 2 months past due.)
6) Two market prices: Homeowner (at 80%) vs. Investor (for just 20%)
(You can sell a foreclosure to an investor for 80% less or refinance a homeowner for just 20% less. Get 60% more $ by refinancing homeowners over foreclosing on them. This is the real estate calculus overlooked by DC. They are politicians and bankers, not real estate agents like me.
Example: Two $550,0000 homes are foreclosed upon and sold to investor for $150,000 each. The four neighbors living in the $350,000 homes walk away because their homes’ value is now only worth half. Their homes sell for just $100,000 so the 8 homeowners living in the $250,000 houses now walk away from their mortgage too. The number of foreclosures is multiplied at each step down of this pricing tier much as it was multiplied at each step up in this pricing tier during the real estate boom.)
7) The higher price keeps lower priced owners in home
(A Higher Price Tier creates equity for Lower Price Tier homes. Refinance $550,000 home for $400,000 and new market price is $400,000 instead of the foreclosed price of just $150,000. However, a lower market price creates next wave of foreclosures because no equity left for lower priced homes either. Real estate’s Tier Down or Tier Up Pricing Principle discussed in next article)
8) Higher price sets ‘Market Bottom’ at a higher Pricing Tier
(THE ‘MARKET BOTTOM’ CAN ONLY BE SET AT THE NEIGHBORHOOD LEVEL, NOT WALL ST. Do you want the ‘market price’ to be what the homeowner can afford to refinance at or at the much lower price the investor will pay for a foreclosed property? We are in a market of dwindling investors.)
9) There is a 30% to 70% greater monetary return refinancing homeowner
(Taxpayers now own these mortgages. Get better returns helping homeowners vs. banks)
10) Properties paid off months or years sooner than foreclosure process
(Many foreclosed properties never resold, so often lose 100% value after taking 6 months or more to complete foreclosure process. Banks, therefore, can only raise 20 cents on the dollar. They have an 80% loss. Refinance the homeowner at 80% and the loss will only be 20%. We will finally come to know where the market bottom has settled and can find the ‘homeowners’ market price months or years sooner than the investors ‘market bottom’ price.)
11) Lower monthly mortgage leaves homeowner more likely to pay on other debts & taxes providing the equivalent of a long term stimulus package.
(Refinancing homeowners with lower monthly mortgage payments will allow them to pay their other bills. This in turn will help all the other distressed industries like credit cards, student & auto loans, local & state taxes, etc. This is a great stimulus package that will last for the entire term of the loan rather the 30 days of the last stimulus package. This stimulus will also lower inflation for it reduces owners’ debt. Homeowners now have 30% less debt while also providing them 30% more in spending power. It may be like offering homeowners a 60% raise. This lower debt ration and higher spending power will strengthen our economy & currency. The dollar rises, gas & food prices fall. In short, we will have reversed this economic downturn.)
12) Foreclosure leaves owner defaulting on all other debts
(Helping the homeowner will help all the country’s other industries. Losing home owner hurts all the other industries. Bailing out these industries separately will not save these industries. The bailout only buys them time.)
13) Entire family also defaults on all other personal debts
(One foreclosure = 4 People defaulting on all their debt obligations: wife, kids, grandma )
14) Greater public support for homeowner then banks
(Finally a program that can win both public & bi-partisan support quickly)
15) ‘Two for one' deal: stabilize banks & real estate market for same $
(Wall Street bailout only buys banks a few months of time while homeowner bailout solves real estate crisis, bank bankruptcies, slumping global economy and squeezed industries.)
Wall Street and Washington have become the fabled Ivory Towers. Both think or at least act as if they are worlds onto themselves wherein success is measured by their well being alone. Hopefully, they will see that their very survival rest entirely on the well being of the country’s everyday American family. Washington’s’ bailout plan is an extreme example of this belief that Wall Street can be helped without the American family. Washington’s plan only raises the cost of this simple lesson. The everyday American is the answer to this great economic riddle and remains the secret of our entire democracy.
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This is sponsored by ROOPA under it’s Save Our Homeowners March that has been activated specifically for this particular occasion (in other words, you won’t find any reference of this on the internet yet). This will culminate with our Sept. 28th Day of Prayer for fellow homeowners with a 12 noon rally at Thompson Square Park in NY City. This occasion will be observed with a fast from food, water and man-made shelter by Mr. Raghu Giuffre in solidarity for America’s homeowners.
ROOPA request that readers ‘march’ (email) this presentation to 10 of their friends who in turn also share it with just 10 of their friends along with sending this on to their local and national media and political leaders too. ROOPA’s hope is to have assembled 10 million notices (sent) to congress and the national media within the next couple/few days. (This is made possible by American Express, Bank of America & Citibank)
10 West ST. Apt. 21E, NY NY 10004, ssriraghu@yahoo.com (roopa.org) 808 277-1120
