Sorry, i can’t spare a dime. Greed (6% commissions, fraudulent appraisals, horrible underwriting practices, deceptive mortgage brokers) should be punished. You enjoyed the good times, live with your mess.

Unless i missed it, there isn’t a word as far as to giving the taxpayers an equity stake for any of its subsidies. Why is your proposal all “Gimme”?

(By the way, what proportion of your 2002 - 2007 real estate earnings have you returned to the community? We’ll give you a tax break. 20 cents on the dollar, over 5 years.)

Yes, i realize the depth of the issue. I am a financial planner with my CFA. Times will be hard, people will be ruined, institutions will be destroyed.

Where does it end? Do we owe every American 2800 sq ft on a 1/4 acre lot? Do we put “two cars in every garage”?

There isn’t an end to your entitlement plan.

A – FIX the stupid Mark to Market accounting requirements ASAP. Banks are getting killed on mortgages primarily because of stupid accounting rules. This concept needs to go away. As it stands, any stimulus that banks get will just force them to fix their books.

B – Develop a stimulus for the home owners. tax payers. All talk about lowering interest rates WONT DO JACK to fix this crisis! Why, because people will still not get access to the money.

A great interest rate is worthless if you owe $250K and your house is only worth $200k. In fact, banks are requiring a 20% equity position and 800 credit scores to qualify for anything.

We need to get the money to the people and do it NOW before it is even more too late. Any money going to the banks will only end up fixing their balance sheets (remember the mark to market comments above?) Yes….we need to help the banks, but we need to do it by helping the very people that need to spend the money.

- The Fed should issue a certificate to each tax payer. The certificates would be valid for a specific period of time….perhaps 5 or 10 years. This is similar to what the Fed does with VA loans.

- This certificate would entitle the holder to a 5 point mortgage discount rate on any mortgage…current or future. It could be exercised NOW or at a later date as determined by the expiration period. Even if the home is sold, the discount is still valid on the next mortgage.

- The holder could exercise the certificate anytime between now or up to the expiration date. The discount would be valid for ONLY a certain period of time and could rollback through the years. I would recommend a 10 year period. So, over the 10 years, the 5 point discount might be reduced by a 1/2 each year until it returns to zero.

- Each certificate would have a maximum value as set by the program. I would recommend $100,000. This means a married couple would get $200,000 if combined. If a married borrower has a $400,000 loan now at 7%, they would pay 2% on the first $200,000 and then continue to pay 7% on the remaining $200,000.

- The rate decrease would be subsidized by the Federal government and lenders would pay their mortgages to the banks as they always have been. The fed is willing to loan money right now at 1% or even .5% anyway, so the actual cost of the program should be essentially zero! So, rather then loaning money to the banks at this discounted rate, so the banks can simply loan to mortgage holders at a higher rate, the money gets right to the people and would not require a re-finance. Or even worse, the banks may end up otherwise just keeping the money.

- This would place about $400 to $600 per month into the hands of the consumer for a typical mortgage and stop a high percentage of the current foreclosures except in extreme cases where people have simply lost their jobs. However, if we can stop the downward home value spiral, people will end up back to work anyway.

Doing this will put money into the hands of people that need to spend it. While the banks may hate this at first, they will love the fact that foreclosures will stop. Besides, most banks don’t hold the debt anyway. This will also stimulate the housing market by allowing people to buy houses….especially first-time buyers and those you have already lost their homes….it gets them back into the market. Also, everyone is treated fairly.

In addition to perhaps not costing any money to subsidize, tax revenue would actually increase to the federal government because a lower mortgage rate would resul in a reduced tax deduction at the end of the year.

I really think something like this could be implemented right way and would have an immediate impact.

This area has seen a 35-50% DECLINE in equity from the peek between 2005-06, and current market prices. Talk about negative equity! Florida homeowners have a huge gap between what they paid and what the home is worth. Unless homeowners bought their home before the year 2000, have never refinanced, or paid all, or nearly all of the home price when purchased they will not be able to sell for 10 years or more without some kind of assistance. This also means all these homeowners are off the market, and will not be buying anytime soon (decreasing demand).

In other words, all homes purchased or refinanced in Florida from 2000-2007 have negative equity. I realize this is a blanket statement, but I challenge you to look at the real statistics and see for yourself. We know Florida is not the only state suffering at this level.

The question we have is this: How do you address and solve the 35%-50% decline in house values? Even with the incentives you propose it won’t take long for people to realize that if they let their current house go they can almost immediately walk into a better house for less money (thanks to desperate sellers willing to lease/option or owner finance). Once homeowners realize that, with normal appreciation, it will take a minimum of 10 years to break even much less make money on there “biggest investment.” Why would they stick it out?

To stabilize supply and value we must create more demand. Our solution is this:

1) Offer first-time home buyers real incentives:
The government is currently offering a $7500 tax credit for first-time home buyers. It is in the form of a non-interest bearing loan, to be paid back over the next 15 years at $500/yr. Not good enough.

We propose that the government make the $7500 a true tax credit incentive and remove the re-payment feature. This will stimulate greater demand and accessibility with first-time home buyers. It could also be argued that this tax credit should be available to all home buyers.

2) Offer ALL current homeowners a tax credit which is first applied directly to their principal balance:
We absolutely agree with your statements regarding principal reduction. It is not right to penalize homeowners that were good stewards of their finances and did not over leverage or over buy when they purchased a home. BUT, the fact remains that we are all sharing in the financial burden of a massive loss in the value of our homes.
In our opinion, the only way to truly affect this large segment of the population is to reduce the principal amount of their loans, so homeowners are able sell their home when they want to, or more importantly, when they need to sell. Like it or not, this area must be addressed before we will see a stable housing market in Florida.

Our proposed plan is: To give current homeowners a $100,000 tax credit*, spread out over 2-3 years, and make it available to all homeowners (should probably include people & builder/developers with investment properties as well). Parameters could be something like the following:
A government issued $33k credit each year for a 3 year period. It must first be used to pay any kind of homestead debt incurred. 1st Mortgage, 2nd Mortgage, HELOC, etc. Once the principal balances have been paid, the remainder will be applied to any other debts incurred. Credit cards, unsecured lines of credit, business debt etc. And for those few people that have been excellent stewards of all their finances (yes, I know of some) that have little to no debt they will be issued a check; to be used however they see fit. Retirement, college fund, investments, etc.

This kind of plan could be designed on a state-by-state level based on the individual state statistics. Markets that are hardest hit would have a larger credit to off set the decline in house values.

We believe this plan would make a level playing field for the entire housing market and would stabilize prices. Houses would be at or near current values, and no family that was fiscally responsible would be penalized for making sound financial decisions. We are betting this would cost a lot less than $700 BILLION to implement, and could actually stimulate the market in a way that promotes actually fixing the problem, instead of delaying the inevitable outcomes associated with permanent declines in value.

We realize that economics is a complicated endeavor and invite your comments and perspective on these ideas. Economics is not our expertise, so we are sure there is room for improvement. However, we have been on the front lines as Florida Realtors for the past 2 years in one of the hardest hit markets in the state. Many people here want help, but the options for real homeowner help are very difficult and often don’t work very well.

Your ideas in ‘A Solution That Works’ are very good, and we will be sharing your website with others as well as contacting our senators. Please let us know if there is anything else we can do to help facilitate these necessary changes and keep America strong.

* $100k Tax Credit is based on the difference in state median home sales in 2006 & 2008, and the percentage of decline from the price peak around 01/2006 to 10/2008.