What I Could Do With $700 Billion

I am not too pleased about the yet to be defined $700 billion dollar bail out that Henry Paulson is proposing.  First, I believe the banks made their bed so they need to lay in it.  Second, I am not sure this is going to do anything to actually stabilize the housing market.  I believe we need to be focusing on a bottom up approach by helping the Joe Blow on Main Street instead of the Fat Cats gambling with our money on Wall Street.  Here are a couple of things I think they could do with the money that would probably have more of an impact:

Federal Works Programs: What is missing from our economy is a wholesale job creation strategy.  I mean real jobs that pay real wages.  Since it is obvious we need more oil refineries and infrastructure improvements, the government should take the bulk of this money and fund building oil refineries to get the cost of gas down and improving the infrastructure of our highways and public transportation systems.  This creates jobs which are what people really need.  Most foreclosures are because of job losses and medical issues, not predatory lending, exotic mortgage programs and the like.  The government needs to focus on helping deserving homeowners get back on their feet with real job opportunities that benefit the public at large.

Stop-Gap Lending:  The housing market is in the toilet and many homeowners are stuck in their mortgages because lenders have constricted underwriting guidelines to the point of absurdity.  Of course no homes are selling and prices are falling.  No one can get a freaking mortgage to buy a home!  They went from making loans to dead people to only making loans to over qualified applicants leaving the bulk of folks with no decent financing options.  

• Conversion loans:  Allow homeowners in good standing to convert their loans to a fixed rate mortgage regardless of appraised value of the home. 
• Silent seconds:  Provide silent seconds that will make up financing gaps if the only reason a home can’t be refinanced is due to appraised value
• Force subordinations: Make it illegal for second mortgage holders to refuse a subordination if the homeowner is simply trying to do a rate/term refinance and not taking cash out or moving to a more risky loan product.
• Down Payment Assistance:  Not referring to the dead in two weeks seller funded DPA.  Offer federally back funds that can be used for down payments on any conforming loan to first time home buyers who are in professions that serve the public good - teachers, firefighters, policemen, social workers and all branches of military personnel.

Expedite Foreclosures:  Yes, they need to expedite the foreclosure process.  Target this at the specuvestors with the option ARMs and $3 million in properties they though they could flip in the hot new condo development in Miami.  Get these properties foreclosed on quickly.  Next start the public lashings of those involved in obvious fraud from the Loan Officers, Consumers, Realtors, Attorneys all the way to the Wall Street titans.

Incentives to Buy Foreclosures: Provide some significant and real incentives to buy foreclosed properties.   Maybe have a 10 year property tax holiday for buyers of foreclosed properties.  Provide financing programs that allow home owners to buy foreclosed homes with zero down and get loans to fix up the properties as well.  

Moratorium on New Housing Development:  There needs to be a massive moratorium on any new developments from these crap box subdivisions out in the middle of corn fields to over priced yuppie condo ghettos.  We do not need any more developers until we get inventories back to a manageable level.

National Standards & Licensing:  Not going to go into it here in detail, but the rest of the money should go to creating new standards and oversight at the National Level that trump State qualifications for Realtors and Loan Officers.  Turn the fields into a real profession and not the joke that it is today.  We need to purge about 80% of the people who call themselves Realtors and Loan Officers. 

Most importantly, the law makers need to LISTEN to those of us who do this everyday and the lobbyist and executives…

Rant over.