{"id":2831,"date":"2008-03-24T20:46:53","date_gmt":"2008-03-25T03:46:53","guid":{"rendered":"http:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/?p=2831"},"modified":"2008-03-24T21:19:26","modified_gmt":"2008-03-25T04:19:26","slug":"the-real-estate-bailout-act-of-2008","status":"publish","type":"post","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/2831\/the-real-estate-bailout-act-of-2008\/","title":{"rendered":"The Real Estate Bailout Act of 2008"},"content":{"rendered":"

When successful financiers achieve a certain level of success, they up the ante and practice social engineering. Robert Rubin<\/a>, Jon Corzine<\/a>, and Hank Paulson<\/a>\u00a0 advanced to government service after piling up the pesos at Goldman Sachs<\/em> (in financial circles, we say those two words with hushed reverence). After decades of whipping and driving the markets, the titans answer the call of noblesee oblige<\/em> and decide to play with EVERYBODY’s money. While I haven’t risen to the austere positions Messrs Corzine, Rubin, and Paulson have, my friend Nick<\/a> and I<\/p>\n

have a little idea about how to save the American real estate market.<\/strong><\/p>\n

Let’s start with the premise that lenders are taking 20-30% hits on short sales. Then, let’s have the US Treasury loan 30% of the balance, of the aggregate debt, to homeowners whom request it, in order to pay down the first mortgage (or second mortgage). If I have $200,000, in aggregate liens against the property, the US Treasury will lend me $60,000, to pay down those aggregate liens, to $140,000. This reduces the lenders exposure.<\/p>\n

What type of loan will the Treasury make to homeowners?<\/strong><\/p>\n

The term can be for the lesser of:<\/p>\n

1- the remaining term of the first mortgage<\/p>\n

2- 65 less the age of the primary borrower.<\/p>\n

The interest rate can be the corresponding term treasury rate, plus .5% (for administrative costs). Maybe we can use some of that “yield spread” to coerce a few mortgage brokers to “originate” this government debt (okay, that was completely self-serving<\/em>). For a 42 year old, with a 27 year term on his first mortgage, the term of this new government loan (in second position) would be 23 years (65-42=23). If a 23 year treasury bond yields 4.1%<\/a>, than the note rate for the new loan will be 4.6%.<\/p>\n

The borrowers never have to make a payment on this debt; it accrues like a negative amortization loan. In the aforementioned example, the balance would grow to about $168,000, after 23 years. With a first mortgage paid down to $140,000, we’re banking on Read more<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

When successful financiers achieve a certain level of success, they up the ante and practice social engineering. Robert Rubin, Jon Corzine, and Hank Paulson\u00a0 advanced to government service after piling up the pesos at Goldman Sachs (in financial circles, we say those two words with hushed reverence). After decades of whipping and driving the markets, […]<\/p>\n","protected":false},"author":15,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_crdt_document":"","jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[26,5],"tags":[],"class_list":{"0":"post-2831","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"hentry","6":"category-lending","7":"category-real-estate","9":"no-featured-image"},"jetpack_featured_media_url":"","jetpack_sharing_enabled":true,"jetpack-related-posts":[{"id":4611,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/4611\/newt-gingrich-kill-the-paulson-plan-hard\/","url_meta":{"origin":2831,"position":0},"title":"Newt Gingrich: Kill the Paulson Plan. Hard.","author":"Greg Swann","date":"September 23, 2008","format":false,"excerpt":"US News:A few quotes and Gingrichian observations: 1) He called it a \"stupid plan\" that looks like it had been designed by autocrat Vladimir Putin. He also said it will be a \"nightmare\" to implement and full of corruption. 2) He said the Paulson Plan would be a \"dead loser\"\u2026","rel":"","context":"In "Group Therapy"","block_context":{"text":"Group Therapy","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/category\/group-therapy\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":5549,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/5549\/the-paulson-clarification-a-tin-foil-hat-production\/","url_meta":{"origin":2831,"position":1},"title":"The Paulson Clarification (a Tin Foil Hat production)","author":"Sean Purcell","date":"November 12, 2008","format":false,"excerpt":"Henry Paulson figured out that buying troubled assets does not help the cause.\u00a0 If you want to own the financial industry you don't get there by purchasing their problems, you get there by purchasing them.\u00a0 (Or at least watching over them with Tin Foil Hat firmly in place.)\u00a0\u00a0 Read the\u2026","rel":"","context":"In "Big Mother"","block_context":{"text":"Big Mother","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/category\/big-mother\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":2324,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/2324\/sharks-eating-sharks-its-1974-all-over-again\/","url_meta":{"origin":2831,"position":2},"title":"Sharks Eating Sharks: It’s 1974, All Over Again","author":"Brian Brady","date":"December 5, 2007","format":false,"excerpt":"\"You suck!\" \"Well, you're a big fathead !\" I like to watch the stock market opening on Bloomberg Television. The cable company lets me have Bloomberg, free, until 8AM so I can get my fix while I lay cocooned in bed. 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