No Cost Stimulus Package___ Believe It! I’ll Prove It.

In The Next 5 Minutes I’ll Show You How My Stimulus Package Costs Nothing to Implement, Raises Real Estate Values, Creates Jobs Almost Instantly, And Makes Money for the Banks and the Government in Less Than One Year.

We all know that without the revival of the Real Estate market the economy cannot improve as much as we would like it to. Being a Real Estate and Mortgage Broker for the past 26 years I have come up with this solution that benefits almost everyone. This may be the biggest transaction of my life, without pay, but it will help the economy and the country.

1.       Underwater Properties:  an underwater property is a property that its owner owes more on the property than the property is worth, but, he or she wishes to keep the property, still has a job but has suffered a reduction in income, can afford a modified loan and wishes to occupy the property as his/her personal residence. Sample property:                      

Home value                                                      = $150,000

Combined loan amount on the house 

(the sum of 1^st, 2^nd, or even 3^rd mortgages)      = *$200,000

Underwater amount                                           = $ 50,000

Solution:

a.       Refinance: Banks to Streamline Refinance the entire $200, 000 @3.75% annual interest rate payable interest only for 10 years and then convert into a 30 year amortized loan.

b.      Trust Fund: Establish a Mortgage Insurance Trust Fund where insurance premiums are deposited.  Government to insure the underwater amount plus 20% of the total loan by imposing a one-time fee equal to 2.75% of the loan amount as an insurance, like the mortgage insurance companies did. This fee to be paid by the bank to the government and be added to the loan not to burden the borrower to come up with it in advance.

Example: Loan amount          $200,000

Property Value                         $150,000

Underwater Amount             $  50,000

Mortgage Insurance= 2.75% of $50,000 + 2.75% of $40,000 (20% of $200,000) = $2,475. This formula insures the Mortgagee the Underwater amount plus a 20% to compensate for the 20% down payment ordinarily required during a purchase transaction.

c.       Personal Guarantee: Borrower signs a personal guarantee for the loan for a 3 year term, after the 3 years have passed the property remains the sole collateral for the loan.

d.      In the event of the borrower’s default, this insurance pays for the difference and covers the bank’s losses.

e.      The amount that the government pays to the bank, if the borrower defaults within 3 years of the refinanced loan, becomes a personal loan to the defaulting borrower, a personal loan that survives bankruptcy, just like student loans.

f.        Assumption: The new loan to be an assumable loan to qualified buyers. The Bank may charge 1% of the loan amount as a transfer fee, plus a set $500 Combined Processing and Funding fee and  0.5% of the loan amount for escrow and Title fee. The bank may (at its own discretion) ask for, accept, or reject a physical inspection report showing an acceptable condition of the property to the lender.

g.       Prepayment: The loan to have a no prepayment penalty clause.

h.      Credit Report: As an additional incentive, finance companies or banks must remove derogatory credit from credit reporting agencies for borrowers who qualify and obtain such loans at new terms.

Annual Interest rates to be fixed at 3.75% for conforming and 4.125% for jumbo loans.

2.       Foreclosed properties: Foreclosed properties are properties that the owners ultimately had no way of refinancing, and not enough income to support their mortgage even if and when modified. They chose to let go of the property.

These properties are a major burden on the banks that had the financing for these homes and the real estate market in general because they are causing a major over supply of properties which, in turn are devaluating entire neighborhoods.

Solution:

a.       Government to purchase foreclosed property from bank at loan value. This will clear the banks from its books to allow for new financing.

b.      Offer said property for lease with the following conditions to promote and incentivize potential tenants:

1.  Offer the property on lease with an option to buy at a predetermined price which should equal the total of the cost of the government purchase of the property from the bank plus 10%, for example: property cost the government $200,000 to own, the price for the tenant to pay in the event tenant wishes to purchase this property within the 3 year term offered to him will be $200,000 + $20,000 (10% of $200,000) = $220,000.

2.  Credit all lease payments made by tenant towards the down payment if tenant chooses to remain in the property and eventually purchase the property within 3 years. Tenant forfeits this right if he chooses not to buy property within the 3 years period and all money paid remains past or paid rent.

c.       The term of the lease to be 3 years or less to qualify for the credit.

This will guarantee that government money is not lost; actually, it is making money and taking a lot of inventory out of the market while helping owner occupancy.

 3.       Damage To property due to foreclosure:

Any borrower, who leaves or abandons his or her property, or lets his or her property go to foreclosure, must hand over the property in a normal wear and tear condition. No additional damage should be made to the property blaming the bank as the cause for the foreclosure and that revenge is in order, such as: pulling drywall from the walls, pulling out appliances, causing plumbing damage, inflicting roof damage, or doing anything that is out of the ordinary. The government will be authorized to place a personal lien on the owner who caused these damages whether the bank or the government end up fixing it to bring the property to its normal condition. Damages charged to borrower are to survive bankruptcy protection.

  

Excess money in borrowers’ pockets will incentivize him/her to spend more. This spending will cause businesses to hire more employees and get the ball rolling. The demand created will tighten supplies which, in turn will generate a moderate inflation, increase asset valuation, and eventually lead to higher rates and increase the GDP (Gross Domestic Product).

It is Not a Secret that When the Real Estate Market Improves the Economy Improves. 

*How to calculate your savings if your payment is converted into a 3.75% annual interest rate, payable

 interest only:  

Take loan amount e.g. 200,000 multiply by .0375 then divide the answer by 12.

$200,000 x .0375= 7,500 take the 7,500 and divide by 12. $7,500/12=$625 your payment will be 625

 dollars a month for the next 10 years. For your own personal loan, replace the $200,000 by your

 total loan amount and check the answer. That will be your payment. Deduct this from your current

payment. 

Self Preservation, Patriotism or Protectionism? What the Government Can’t Tell You, I Will

There is a good reason why Government officials cannot tell you to do certain things; in this instance, and probably this is the only instance where, these officials are right in doing so.

In this Global economy where every country depends on another country to trade with, to buy from, to sell to, people and governments must learn to walk a very fine line for their survival.

That fine line gets much finer and delicate when it comes to governments and their officials. Every word, every physical expression, every move, which is measured, analyzed, scrutinized, politicized may result in peace treaties, or cause wars to erupt.

When a temporary savings of 5 cents is costing hundreds of dollars in the end, people should avoid shooting themselves in the foot and must think for themselves and decide which serves their best interest in the long run.

The Government cannot demand or force us to buy American nor impose tariffs and fees for imports to discourage us from buying cheaper imported goods; that will be seen as Protectionism. And if we adopt that philosophy or mentality, all countries we export to will do the same to our products.

The Government cannot force us to buy American preaching Patriotism. Every country and its people love their country and are patriotic enough without the government pushing them to be one.

The people however, can take matters into their own hands and buy American without making public announcements for the purposes of Self Preservation.

Take a moment and think of this, every penny you are saving by buying a product made outside of the US is costing you an extra dollar and a job. Here is why and how:

Although I congratulate all emerging countries for the advances they are making in their countries; I can’t help but notice it has tremendous and very dangerous effects on our country’s future. By just comparing per capita income of 3 sample countries we will see where things are heading.

The same product manufactured in the US will cost $47,400 (U.S. Annual Capita Income)/$3,339 (India’s Annual Capita Income) = 14.195 times what it would cost in India and $47,400 (U.S. Annual Capita Income) /$7,518 (China’s Annual Capita Income) =6.305 times what it would cost in China in labor. Source: Chinahttp://bit.ly/jKOafJ $7,518 India http://bit.ly/jcAt3E $3,339 U.S. http://bit.ly/iV09Bu $47,400

When we add all other developed countries which are doing the same thing, buying from outside their country, we are creating a volume which is adding up to an additional 25 million jobs needed and created per year in China alone.  Where, at the same time, and in the same period, we cannot even create the million jobs needed a year, just to keep up with our population growth. This new middle class surge is in the emerging markets such as: China, India by the millions is causing a huge demand on everything from food, clothing, shelter, wood, copper, oil and everything every middle and upper class people need and use.

The leaders of these emerging countries deserve a lot of credit for achieving the success they have and still are achieving. Especially interesting is their mentality of buying all natural resource mines they can possibly put their hands on around the world; by taking this kind of an approach they are securing the pricing and production control, which most developed capitalist countries didn’t even think of doing until recently.

This high demand in all commodities, supplies, housing, and manufacturing has made prices here in the US unaffordable for us. Building a 1300 sq.ft. house that used to cost $50,000-$60,000 10 years ago is now costing $150,000-$200,000 because the cost of materials have doubled, tripled, and in some cases quadrupled. U.S. labor costs, were already more expensive than labor in almost any other country. So the few cents we are saving on a toy or a sofa made in outside the US is costing us our American Dream andThe Jobs that used to make it possible to achieve those dreams.

Self Preservation is not a shame, it is not forbidden; it is a must to save our country, the next generations and their future in this country.  We cannot expect companies to hire in the U.S. and provide us jobs and job security, when we are buying Chinese, Indian, Korean, or any other country but American to save a penny. They, the companies, manufacturers, service  industries will have to hire in those countries to make the goods we are looking for, to buy them for cheap in here, the United States. Buying others’ products, because we are saving few pennies here and there, is like winning the battle but losing the war. Winning the battle, because we could save few dollars a month, but, losing the war, because we are losing the jobs and the income to afford those products to be able to buy them in the first place. We are losing the American Dream.

It is us who can do something about this situation, not the government, not the companies we keep blaming.

The Government cannot tell you to Buy American, I can.

Who’s Minding Your Seed?

http://www.youtube.com/watch?v=--X0tO2RC3c

—We take great care when planting a vegetable seed or a tree with the expectation of having the best vegetable or the best looking garden. —However, when it comes to the most important seed, our seed, we fail miserably.—As they are born we nurture our young for a while, then, we somehow find ourselves delegating our responsibilities to others; such as nurseries,  babysitters and eventually teachers.

—Teachers may want to teach and fulfill their obligations they so willingly took upon, but we have reduced them to babysitters and taken away all disciplinary tools and authority from them.

—Employers want to hire educated and skilled individuals; otherwise they’ll hire in other countries

—Parents do not have the time, teachers do not have the authority to discipline —and our government is asleep at the wheel unaware of the dangerous road ahead.

—Ironically, the scum of the world, the lowest of the low, the ones who we look down at and who are supposed to be the dumb asses, have it exactly right.
—They start recruiting at an early age, the drug dealers, gangsters and pimps infiltrate our schools and poison and solicit our kids.

—Schools are the ideal recruiting venue for these individuals to establish a loyal client base. Sex, drugs, gangs and alcohol are more readily available than books.

—What it boils down to is what we expose our kids to. If we expose them to the right stuff they will do the right stuff.

—We can solve this problem very easily and in a very cost effective way. This is how:

—Businesses, companies, corporations and government entities, volunteer to prepare a 2-5 minute video or DVD highlighting their respective organizations.

—The video would include an overview of employment opportunities and a 5-10 year projection for each department.

—Department of Education and Department of Labor would manage the database and make the videos available to the public, especially in schools.

—The videos would be incorporated into the curriculum, so that students are exposed to different careers of which some might pique their interest.

—For Example: If a kid has not seen a guitar, has not touched a guitar, and has not heard a guitar will not know if he is interested in playing the guitar. When a kid is exposed to drugs, has tasted the drugs, has enjoyed the drugs he will try to do drugs.

—Of course; the difference is; a drug dealer does not tell the kid that; that drug is ultimately going to kill him. But, we can tell our kid that if he plays the guitar and he is good at it and he likes it, it will probably provide him a very decent living and a lot of fun.

—By implementing this plan we will have enough information for our kids to find out what their interest is and if it will pay for him/her to pursue it. The employers will benefit by always having the necessary supply of talent.  Our kids will benefit by knowing what to study to secure employment.

—I truly believe we can make this work with minimum cost and maximum impact.

http://www.youtube.com/watch?v=--X0tO2RC3c

Who’s Minding Your Seed PowerPoint Presentation