Thanks to all those who read my last blog, which was also my first!

I was pondering the state of the state this morning, trying to think of a complex solution. However, it dawned on me that the solution to the current crisis is simple and straightforward.

First lets look at the problem...

A. People are in homes they can't afford

B. Banks keep dumping homes on the market at below market value prices, hurting everyone

C. The 80% of us who pay our bills ontime, feel like we are getting screwed as we see people take advantage of the system (agents, are you seeing people in your market buy their new home and then let their old one go back to the bank).

Here's the solution.

IF you need financial assistance to pay your mortgage and stay in your home, lets have your bank reduce your rate 1% (maybe its to a fixed rate for everyone), but put you on a 60 year term.

Here's why it works

Lets say your original loan is for $300k at 5.5% interest giving you a Principal and interest payment of Approximately $1,703.

Now lets modify the loan to 4.5% and extend the term to 60 years, your payment drops to $1,206, or a $500 monthly reduction, you get to stay in your home.

Why it works

This is an equitable solution because while the troubled homeowner gets to stay in their home, they will have to pay longer or pay ahead to catch up.

10 years down the road, the person who doesn't need the modification has paid down almost $53,000 of Principal (meaning $53,000 of equity assuming no appreciation) while the person on the modification, who got to stay in their house has approximately $12,500 of Principal reduction.

Thus, there is benefit to both the people in need of help and the people who don't need help. We drastically reduce foreclosures, stabilize property values, and start moving forward again!

If you think this is a great idea, forward it on and lets make some noise!

Thanks for reading!

Lee