I was doing some research this morning on the federal reserve sight. It gave me some thoughts on how to solve the housing problem with real numbers without a a lot of extraneous effort. The math is below. If a check of $24,000 is sent to every mortgage holder, does not solve the individual problem at least they can go rent a place. It always amazes me how we want complicate the problem. If high cost areas are a problem you could easily allocate the money by the volume of the debt and really make sure the problem was solved but it seems we prefer a more complicated way to employee more government workers and create more dependency on the government.
I do realize that the issues is the securitization of the loans and not just housing itself. There was another federal reserve study just recently done that stated the original debt to income ratio was not a good predictor of default on the home loan. The best default predictor was the current income of the home owner, IE whether or not they have a job or the hours were cut back or another household member had lost there job so there was not as much income in the house.
The math to solve the housing crisis
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total amount of mortgages outstanding |
total number of mortgage holders |
average debt |
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12,000,000,000,000.00 |
50,000,000.00 |
240,000.00 |
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amount committed by the fed |
divide the amount to spend |
send a check to all |
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to the mortgage market |
by the number of mortgage holders |
mortgage holders |
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1.2 trillion or 10% of outstanding debt |
50 million |
$24,000.00 |
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problem solved |
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