My Economic and Real Estate Recovery Plan

I have been a little hesitant to post this, but it has been on my mind for the last week or two, which is probably why I have not posted as much lately. I've been trying to think of the right way to present this, as I keep getting urged from people around me that I should speak up about how we might be able to get out of this economic/housing situation.

So first, I want to say, that this is not meant to replace any current programs out there that have been floated by our government. I think that there are some very good programs that have been started with the stimulus bill that was passed. I also think that there were a few things in that stimulus that should not have been a part of it.

Second, I do think that the new plan to help stop foreclosures could work, as long as the banks buy into it.

So, kind of the same thing with this, people would have to buy into it. The agents and business people I talk with (Democrat and Republican) seem to like what I am about to propose that our government look at doing. Now that the disclosures are out of the way, here it goes.

To fix the economy, job creation and real estate recovery must go hand in hand. My plan to create jobs, would be through energy independence. I would accomplish this by giving every new start up "green" business 100% exemption from taxes of any kind for the next 2 years. It seems a little radical, but, it would enable small business to avoid a huge barrier and empower them to hire employees and invest capital in research and development. For existing companies that chose to invest in "green" technology, they would get a partial tax break depending on the amount of their business is dedicated towards it. I think this would lay the foundation for a large employment and education "boom" in this country as people would need to be retrained as the old style blue collar jobs have gone away and probably are not coming back. This would create a new kind of blue collar job. Also, this would strengthen our national security by lessening our dependence on foreign energy.

The real estate side of things, I feel, can be fixed by smart lending. A few years ago, the mistake was made by letting people with bad credit history buy a house with zero down with a low interest rate. Since then, lending has went the opposite direction as a knee jerk reaction. We need to get back to sensible lending practices again. Zero down programs are not the problem. Giving zero down to people with bad credit is a problem. People with a credit score of 720 or higher and good debt to income ratio's should be able to buy a house with zero down and get a good rate. They have proven over time that they pay their bills on time and are responsible with their credit. People with 719 down to 660, should be able to by a home with 2% down and an interest rate slightly higher-say 1/2 point higher. People with 659 down to 600 should be able to buy with 5% down and a point or so higher for an interest rate. This will allow the people that should be buying to buy, and make it more difficult for others to buy, which is how it should be. I have known people that earn close to 7 figures a year that have 600 credit because they don't pay anything on time. It is not fair that they get the same or better rate than a person does making $80,000 per year that has a 790 credit score.

To fix foreclosures, in addition to what the government has already started, I would do a temporary moratorium on foreclosures for 6 months for the unemployed. After 6 months, they would have to make 1/2 mortgage payments for 3 months. At 9 months, they would have to make 3/4 of a mortgage payment monthly. After 1 year they would be back to having to make a full mortgage payment. All missed payments and monthly shortages would be put onto the back of the loan. This would give people enough time to find another job or get the necessary job training to get another job. It would slow up the glut of houses hitting the market and keep people in homes.

These are some radical ideas, but they could work, I think. Let me know what you think.