I am a genius! I have solved the housing crisis!

Mortgage and Lending with The mortgage help you want when you need it.

Yes folks, I Beth Forbes, have a solution to the housing crisis! I'm a genius. The problem in a nut shell is over supply coupled with under demand.

I read an article a few weeks ago, Fear of Financing, written by Janet Guilbault that I felt accurately described part of the cause of the current crisis. The people who can qualify to buy homes are afraid to finance, afraid they don't qualify, afraid they don't have enough money for down payment and closing costs. The people who qualify are also afraid to buy, afraid that they will over pay, afraid that the bottom hasn't been reached, afraid they may lose their job.

So here is my super duper, genius plan. Rather than give a ridiculous amount of money towards rate reductions or throw good money after bad bailing out delinquent homeowners who will never NOT be delinquent home owners (until they become renters) lets lend some money to the only people who are not afraid!

I'm talking about real estate investors. Before you get all crazy and tell me that these are the people who got us into this mess, hear me out. I'm not suggesting lending money to speculators, people who can't verify their income or people with questionable credit ratings. I say, let's get a government program together that lends money to people who already own multiple properties, who have excellent and deep credit who actually WANT to buy up the over supply of inventory. There are a large number of investors who own multiple properties that actually produce income for them who would just LOVE to buy up some of the great deals available right now but are hamstrung by current lending guidelines that say they can't own more than 4 financed properties.

Here are the guidelines. 700 credit score (if you have multiple mortgages on your credit and can maintain that score you're doing great). Must have 5 or more years experience as a multiple property landlord. Must put 20% down on a single family or 25% down on a 2-4 unit. Subject property must debt service at 1.2. Total property portfolio must debt service at 1.0. Must have 6 months liquid cash reserves. Must be able to fully document income and have a total back-end ratio no higher that 45%. Must pay an upfront "loss reserve" payment similar to the upfront MIP on an FHA loan and monthly "loss reserve" payments much like monthly MI.

There are a LOT of people who would qualify for that, would love to take advantage of it and those people would start clearing out the over supply of inventory. Any plan that does not include provisions for these people is underutilizing a private sector solution to what is becoming a government problem. While I understand that this would still be a government subsidized program, I don't see how it's much different from the FHA.

The problem with home values is that banks continue to foreclose and there aren't enough buyers to keep up with the supply. Rather than subsidizing the buyers that already exist ( like the rumored 4.5% rate subsidy), let's make a whole new pool of buyers!

See, told you I'm a genius!

For those reading this who do not know my sense of humor please understand that this whole post was written with tongue firmly in cheek. (although I DO think it's a heck of an idea)

Beth Forbes Your 24/7 Loan Officer (484) 239-2014

Call me for all your mortgage needs. Areas of service PA, NJ, NY, CT, DE, MD, VA, SC, FL, MI and IN


Catina Wright
Lake & Land Realty - Rocky Mount, VA
Your franklin county va expert

Beth, Great post!! I will back you 110%. Whatever I can do!! It sounds like a great plan. Great Job!!

Dec 10, 2008 02:12 PM
Michelle Chamberlain
Above All Financial Services -Pennsylvania Mortgage Broker - Secane, PA
Suburban Philadelphia Mortgage Broker


Great idea that will never go anywhere further than this blog.  No politican would get behind a plan like this since they'd have to try to undo the "everyone deserves to be a homeowner" mentality that's been ingrained into us for decades.  Anyone who pushes a plan which would would have people losing their homes, becoming renters , and benefiting investors would never get reelected.

If the market weren't so bad, i'd imagine this would happen naturally without any government intervention.  But as you mention because of current lending restrictions, most who are willing to invest can't get the financing.

Besides, don't you know the government doesn't do anything that makes sense, let alone that is genius?


Dec 10, 2008 02:29 PM
Sue Botelho
Waterstone Mortgage Corporation - Fort Walton Beach, FL
USDA Rural Housing Mortgage Pro


I am actually getting interviewed tomorrow by Good Morning, America for their show airing on Friday about how to help the real estate market and people who are delinquent.  I am certainly going to try to find a way to get this information to them....I had a friend who mentioned the same thing!



Dec 10, 2008 02:38 PM
Mike Jones
SUNSTREET MORTGAGE, LLC (BK-0907366, NMLS 145171) - Tucson, AZ
Mike Jones NMLS 223495


I love it when loan officers get featured here in the Rain.  You're right.  It IS a heck of an idea.  (Better than many coming out of the nation's capitol, IMHO.)

Mike in Tucson

Dec 10, 2008 09:27 PM
Jason Sardi
Auto & Home & Life Insurance throughout North Carolina - Charlotte, NC
Your Agent for Life

Beth - Besides being an exceptional post and idea, I'm still chewing on whether you are really smarter than me;)  So when exactly are you going to throw your hat into the Political Arena?

Dec 10, 2008 10:50 PM
Tanya Venable
Orlando, FL
SEO, Mobile SEO, and Internet Marketing Consultant

Beth, I like it.  It would definitely help get the economy moving.

Dec 11, 2008 12:00 AM
Jason Ellis
Coastal REO Solutions - Myrtle Beach Short Sales & REO's - Myrtle Beach, SC

Beth --  I agree the housing problem is SUPPLY -- Too many home for sale -- (even if your post was written with tongue in check it is ideas like this that can help turn the market around) -- I to believe the first wave of Buyers will be the investors that have been sitting on the sideline -- I would like to take your idea a step further to try and speed the process (housing recover) up -- MAKE all Real Estate purchase completed in the tax year of 2009 exempt from Capital Gains (for ever) -- This will add urgency to your idea or any idea/plan and dwindle supply which will in turn create stability -- just a thought -- great post and great idea!  JE

Dec 11, 2008 01:49 AM
Jerry Murphy, CRS, SRES
Long Realty West Valley - Anthem, AZ
Anthem, Phoenix, and Scottsdale AZ Real Estate

I agree Beth. It's silly to put a limit on these investors if they have proven track records.  As for the fear factor prevalent in our society these days, people just have to wise up.  Maybe it's our duty to
"wise them up" but they need to do some research, read more, and understand that these are the times when the smart people make their money.  Unfortunately the average Joe will not get back in the market until they hear CNN, Fox, ABC, and NBC tell them it's safe to get back in the market.  As we know, it will be too late then.  Best of luck.

Dec 11, 2008 01:50 AM
Lucky Lang
Premiere Plus Realty Marco Island - Marco Island, FL
Marco Island & Naples Florida Real Estate


Laura and I have bought three more rental houses this year.  We close on the last one in two weeks!

You are exactly right!

Take care,

Lucky :)

Dec 11, 2008 01:52 AM
Cristal Drake
Circa Properties - Fullerton, CA
Realtor - Fullerton Real Estate

Beth for President!!!!!!!!

Dec 11, 2008 02:08 AM
Beth Forbes
The mortgage help you want when you need it. - Center Valley, PA
Your 24/7 loan officer

Steve- I'm sure it will be a cold day in you know where when something that makes sense actually gets any attention on the Hill. LOVE the term the "loch ness 4.5%" and I have a huge book of business just poised to take advantage of it even if I think it is a short sighted and stupid idea.

Bob & Carolin- Thank you so much and the same to you and yours!

Diane- They really don't get it and they're not asking the right people (US) for the answers.

Ray- It IS a real problem and solving it would move a lot of inventory which would in turn stabilize the housing market which would in turn stabilize the financial markets which... well you get the point. I'll check your blog out in just a little while.

Bob- Not sure about speeding up the foreclosure process, I'll leave that to another genius to figure out! I just know that the people who want to buy right now can't.

Daniel- You are EXACTLY the person I have in mind. A couple thousand people just like yourself who could actually get financing would go a long way to stabilizing the housing situation.

Robert- Thank you for your kind comment! I obviously am seeing the same thing you are with regards to the largest group of potential buyers. Of course the government will keep chasing it's tail and spending our tax dollars on programs that will have very little impact on anything except the national deficit.

Audrey- It certainly couldn't hurt to ask your mortgage guy (gal) what options are available to you.

Charles- I think this would stimulate the housing market greatly. The people I'm thinking of aren't really worried about losing their jobs (since property ownership IS their job) and have the experience to know this is the best time to buy.

Frank-  I'm afraid you won't see consumer confidence return until there is stabilization is the housing market, it's a vicious cycle.

Catina- Thanks so much! If only we could get everyone on AR to lobby their representatives with an idea like this it actually might get looked at.

Michelle-  Well I can tell that it's gone to my State and Federal Senators and Congressmen as well as to the PAMBA and the president of my local board of Realtors. This plan doesn't push people out of their homes it just addresses what to do with the homes that are bank owned. Of course that won't do any good but at least I can say I tried!

Sue- How cool is that! I will watch you tomorrow! Congrats on the interview.

Mike- It is an idea isn't it?? Of course it make too much sense for it to have any chance... I also like to see mortgage people get featured. We're kind of the red headed step children of AR... Oohh I feel another post coming on!

Sardi- But I am, just ask anyone except Jenn. As for the other, I'd much rather be a talking head or puppet master than a politician.

Tanya- I think so too. It's a shame it will probably never happen.

Dec 11, 2008 02:10 AM
Mike Frazier
Carousel Realty of Dyer County - Dyersburg, TN
Northwest Tennessee Realtor


Congrats on the feature. If it were not for investors, my sales would be almost 0.

Dec 11, 2008 02:23 AM
James Wexler - Scottsdale, AZ

Beth, great plan, and congrats on the featured post, very impressive, Love the plan, the real question is 'are there any buyers left ???  most people have bought and cant sell OR they want to buy and cannot qualify

Dec 11, 2008 03:08 AM
Jim Frimmer
HomeSmart Realty West - San Diego, CA
Realtor & CDPE, Mission Valley specialist

The real estate investors, as well as foreign buyers, seem to be out in full force here.

Today is the first day of the rest of your life -- make it a good start.

Jan 05, 2009 10:57 AM
Robert Rauf
CMG Home Loans - Toms River, NJ

Beth, Great ideas.... but instead we have 4 properties MAX !

I think another solution would be to teach agents the use of the word "NO" in their listing presentations.  If we got rid of over priced listings, and sellers that do not need to sell, inventory would be down and we would remove that piece of the problem!

Jan 27, 2009 03:01 AM
Keith Pound
Realtor, Auctioneer - Louisville, KY - 502-645-5950

Beth, great points, I have built most of my business on investors and to increase their ability to purchase this deals, would be a slam dunk.

Jan 27, 2009 11:28 AM
Pat Starnes-Front Gate Realty
Front Gate Real Estate - Brandon, MS
601-991-2900 Office; 601-278-4513 Cell

I think you are a genius! You nailed it! We need to reduce the glut of inventory and get these homes off the market.

Feb 20, 2009 07:05 PM
Tim Bradford
Cleveland, OH
NMLS 250013

Beth,  I am supprised Jeff Belonger linked to his Call for Action post today.  

Jun 17, 2009 03:24 AM
Beth Forbes
The mortgage help you want when you need it. - Center Valley, PA
Your 24/7 loan officer

Tim, Jeff's an old friend with some good ideas his own!

Jun 17, 2009 03:40 AM
Tim Bradford
Cleveland, OH
NMLS 250013

I was just confused, His post seemed to support your suggestion.   Then you ended saying "Most was written Tounge in Cheek" So I was not sure.   Most of your post made logical sense, however I might question how many real investors would qualify and those that did would be willing today to invest in Real Estate.   One problem I see in my area is most investors want to buy, renovate and resell.  

Jun 17, 2009 04:04 AM