$700 Billion plan should include

[jIM_Ohio]

I've heard this many times, but am curious... how would this be addressed? You can't simply say 'do it' and it'll happen like magic. Mortgage backers would be acting irresponsibly to refinance the "upside down" loans point blank, and I'm not certain of a good way to go about making this actually work.

One idea I had on this:

bailout plan B

Offer a plan to refinance houses upside down to fair market value of the home. Offer 6% interest rate for good or excellent credit scores and tier the rate higher based on average credit score from all 3 bureaus.

The difference between Fair market value and the mortgage amount is put on a second mortgage which has the INTEREST deferred indefinitely. There is lien on the house by the IRS.

1) If the house is sold both liens must be met- meaning people cannot move until both mortgages can be paid in full.
2) If the house goes up in value the mortgage can be refinance and the IRS lien is removed.
3) If you foreclose, you owe the IRS money. That would allow garnishment of wages and similar. Basically IRS is highest financial power in land- people messed with banks, so now let them mess with the IRS.

Legislation should be passed so the IRS lien cannot be removed because of death or bypassed by inheritance rules.


The cost of this:
1) the interest rates for the first mortgages need to be paid for (might involve points or similar). Banks will need to accept these mortgage even if they are lower than current market rates.

solution: possibly remove a portion of mortgage interest deduction on tax return or remove portion of standard deduction on tax return to pay the points (if needed). Penalizing the people in this situation with fewer deductions is a good penalty for the consumer.

2) The second mortgage interest needs to be paid to the IRS (they hold the lien). The choices would be "interest free" second liens held by IRS, but I think an interest rate tied to the CPI (so the money paid keeps pace with inflation). This might be moving money from right pocket to left pocket as far as federal budget goes, so this needs more thought.

There is no tax deduction for interest in defferment.

[kork13]

Hasn't there been mention before of getting Jim here put onto the presidential ticket?

[maat55]

Hasn't there been mention before of getting Jim here put onto the presidential ticket?

Easy, Jim may have to buy bigger hats.

[sweeps]

Hasn't there been mention before of getting Jim here put onto the presidential ticket?

The bonus is he comes from a crucial swing state.

[cptacek]

Your plan won't pass Jim. It makes too much sense. And no one can dip into the till, so votes can't be bought.

[tripods68]

That's kind of where I was getting at but Jim puts in more eloquently.

You got my vote Jim!

Too bad, Washington don't listen to real people that makes sense.

[tripods68]

One idea I had on this:

bailout plan B

Offer a plan to refinance houses upside down to fair market value of the home. Offer 6% interest rate for good or excellent credit scores and tier the rate higher based on average credit score from all 3 bureaus.

The difference between Fair market value and the mortgage amount is put on a second mortgage which has the INTEREST deferred indefinitely. There is lien on the house by the IRS.

1) If the house is sold both liens must be met- meaning people cannot move until both mortgages can be paid in full.
2) If the house goes up in value the mortgage can be refinance and the IRS lien is removed.
3) If you foreclose, you owe the IRS money. That would allow garnishment of wages and similar. Basically IRS is highest financial power in land- people messed with banks, so now let them mess with the IRS.

Legislation should be passed so the IRS lien cannot be removed because of death or bypassed by inheritance rules.


The cost of this:
1) the interest rates for the first mortgages need to be paid for (might involve points or similar). Banks will need to accept these mortgage even if they are lower than current market rates.

solution: possibly remove a portion of mortgage interest deduction on tax return or remove portion of standard deduction on tax return to pay the points (if needed). Penalizing the people in this situation with fewer deductions is a good penalty for the consumer.

2) The second mortgage interest needs to be paid to the IRS (they hold the lien). The choices would be "interest free" second liens held by IRS, but I think an interest rate tied to the CPI (so the money paid keeps pace with inflation). This might be moving money from right pocket to left pocket as far as federal budget goes, so this needs more thought.

There is no tax deduction for interest in defferment.

Part of the $840 Billion package signed Friday include a $300 billion Hope for Homeowners program aims to refinance about 400,000 borrowers with risky adjustable-rate mortgages into fixed-rate 30-year loans administer by FHA. But there's a catch: Loan services must "write down" the new loan amount to the home's present value. That means banks/investors must accept the losses. The trick now is to convince the bank to accept the losses for those who are upside down without impacting your FICO scores.