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The Mortgage Crisis: Time for Real Solutions

From a Real Estate Brokerage Owner in CA
How to Fix the Housing Dilema: As buyers keep waiting to buy, due to falling prices, the problem continues to grow. Now even peolple who bought with $150k of their own money down are begining to walk away from their homes. If we can help put a floor under values we can stop this costly spiral meltdown. Benanke's idea to forgive principal is good, but the following idea is an easier and less costly way for the government to make people want to stay in their homes. Lets create an FDIC sticker for a home like the one on the window at the bank. It basically insures that if you put money in youll get money back later. Lenders currently protect themselves with PMI (Private mortgage insurance). We should make this available to home buyers, that if they agree to
hold the home for a least X number of years that the value will be
insured if they have to sell after that time. The owners could make a small payment per month to pay for the insurance. Buyers would not wait any longer to start buying again and this would put a floor of confidence under the market. At some point in the future a smart insurance company who is already recognizing a bottom in the market anyway could step and make a lot of money at low risk. Government could encourage the insurance industry to create an FDIC like insurance that would stop this spiral down dead in its tracks. Sophisticated investors don't leverage 10:1 without some kind of investment protection insurance, why should the average guy own a home without it.