Real Estate Stabilization Act

The proposed Real Estate Stabilization Act of 2011 (RESA 2011) is a tri-party collaborative proposal mandating cooperation from lenders, government and homeowners that will stabilize the real estate markets, enabling a full economic recovery. This presentation represents the short form plan.

Overview

Legislation to require the holder of any note or portion thereof, said holder having received funds through EESA, TARP or any other relief/economic stabilization program, secured by 1-4 unit residential housing; the beneficial interest thereof obtained in any manner including, but not limited to origination, purchase in the secondary markets or acquisition of another institution, shall be required to offer loan modification.

Statement of Facts

Since the onset of the economic crisis, in California alone there have been over 3.5 million REO re-sales and Short Sales, with the resulting loss in real estate taxes exceeding $9 Billion (the projected deficit being $9.25 Billion). In addition there are another 2.5-3 million homes with negative equity; plus some 400,000 bank owned vacant properties that have yet to impact the real estate tax base. As the crisis that the states find themselves is caused by a banking crisis, and thus under federal regulation, they have no direct control over their financial destiny. The only options available, cost cutting, mostly through lay-offs and curtailing of services are by their very nature counter productive, actually worsening the downturn. Using the current FHA/HUD actuarial of 4% appreciation for the next 20 years, left unchecked, the real estate crisis will prevent an overall recovery until, at the earliest, 2022.

Lender Contribution

1. Existing mortgage to be written down to the current fair market value of the property

2. New mortgage loan to be written 5 year reset with a 50 year amortization.

3. Initial interest rate to be the lesser of 4% or 1 % over the

     current yield of the 10 year treasury note, with an adjustment margin of 2.5%.

4. Rate cap each 5 year period shall be 2%+/-, with a 5% lifetime cap.

5. The note shall be assumable and carry no pre-payment penalty.

6. No traditional debt-to-ratio qualifying.

7. In instances where the homeowner is currently unemployed, 1 year Principal-Interest to be calculated and added to the principal amount due. However, borrower to fund the tax a insurance escrow account.

Federal Government

Contribution

1.  Employing current loan-loss guaranty formulae, lender to be reimbursed for loan write down to 80% of the original principle, plus any accruals.

2.  Lender to receive additional tax incentives to offset the write down.

3. Lender reimbursement to be treated as a loan to the homeowner; and repaid through the waiver of the mortgage interest deduction.

5. On a dollar for dollar basis, lenders to be relieved of loan loss requirements for all modified loans. Caveat being that loans must be made for the easing. "Lend it or Lose it".

Homeowner Contribution

1. Waive the mortgage interest write off on federal and state tax returns.

2. In the instance of an existing foreclosure, a forbearance agreement to included with the note, and

recording documents.

3. Waive any reduction in real estate taxes

4. Establish an escrow account for taxes and insurance with the lender at 0%.

5. Should the homeowner fail to fund the escrow account, the lender shall be relieved of the terms of

RESA; and free to proceed with alternative methods of relief including deed in lieu,

foreclosure or short sale.

6. Government contribution to be a personal indebtedness. May be retired through the sale of the

subject property and/or the mortgage interest waiver in #1 above

Benefits

1.Stabilizes the housing markets, halting the current free fall in values.

2.Halts the dramatic erosion of the real estate tax base, thereby aiding in the financial recovery of the various states, and local governments.

3. Retains citizens in their homes.

4. Prevents the erosion of neighborhoods and communities.

5. Provides the confidence required for consumer spending needed to fuel the recovery.

6. Government contribution (stimulus) will result in greater overall confidence and consumer spending thereby fueling the recovery.

The A.I.G. Bonuses ..Get Over It...

I note with great interest that the people screaming for the most blood are the very same members of congress who could not take the time to read and understand just what they were voting for... They admitted that they were surprised that this issue of executive compensation and bonuses was not covered in the bill that they just voted for! I note too, that the silence from Speaker Pelosi and Senator Reid is quite deafening... could it be that they know that in forcing the vote on what is most probably the single most important piece of economic legislation in our history, in less than the promised five days, they are directly responsible for yet another screw up...

Get over it, the damage has been done, the bonuses, that is if they are in fact bonuses and not commissions, have been legally paid; and, if enacted, this latest waste of our time and money by congress will most likely be proven unconstitutional... Hopefully the president will have the will power to use his veto powers, saving us the cost of taking it to the Supreme Court... Let's see now, "you" work for XYZ Widget Company, have done a great job, "you" have an employment contract calling for incentive pay whenever you meet or exceed your quotas and the company paid you a handsome bonus... but then the company files for bankruptcy... the creditor's ask the bankruptcy judge to invalidate your contract and order that you return the bonus... do you believe that you ought to be compelled to return it?... I didn't think so, you have a valid contract, right...

I note too that the public, which in 60% of the case is too damned lazy... too taken up with American Idol and Survivor... too busy Twittering and “Facebooking” to put down the remote or cell phone and vote... even too damned lazy and disengaged to pick up a pencil and fill in an absentee ballot... to damned lazy to write to their members of congress (it's OK folks, Word has spell check)... and then, when the media tells them too, they wake up and start screaming... please, either start paying attention... get involved... see to it that this sort of gross negligence on the part of congress doesn't happen again... or else do as YOUR member of congress fully expects you to do... sit down, shut up, go back to your reality television programs and enjoy this "E Ticket" ride that they have placed us on...

A dolt is a person who consistently screws things up... now, think of congress... but in continually returning these mostly inept people to their seats in the capitol, without any real scrutiny on our part, are we not doing the same thing, screwing up!... In failing to participate in the electoral process... in failing to do our jobs as citizens and provide oversight of our elected officials (at every level) we are getting just what “we the people” asked for... the finest government that the Sierra Club, NRA, Oil, Farm, Wall Street, Banking, Insurance, Union, "Widget" or any other special interest lobby can buy… even a three year old learns not to put its hand in the fire twice...