Banks are in the business for giving out loans. People want credit, so it is not about equity we build. It is about credit worthiness, or Credit Appreciation in making payments and never thinking about defaults.
If banks adopted 2 Loan Policies for Mortgages, we would never have these issues. People would not be worrying about how to pay their loan, because the bank offers the service in how they can do it. This makes the bank more secure, and it makes the housing market more secure and stable. We need to separate our homes from the economic factors work place. One can not rely on the other. Presently both are unstable. But if we have our homes secure with the 2 Loan Mortgage Policy; having to deal with an outside unstable work place economic factor; we are assured that methods to provide secure work place economic factors, can come to being.
In Asia the markets copy American standards, and with more than doubling of people because of population size their failings are recognized sooner than inside the USA. Asia does not have a 2 Loan Mortgage Policy and they play the same bag of tricks the US does with Bernake at the up and down button. They ultimately fail.
With the 2 Loan Mortgage Policy people won't have to worry about being laid off from work, since most people are on fixed incomes. As long as payments are made, and the banks obligations are met, then banking and home buying will go on indefinitely. Bank plans now to tighten banking loans because of questionable risk is more of a disaster than our present situation; because it causes shut downs and deep despair in communities.
Presently Banks create the risk, because they don't provide a means to cover it. Banks can't blame the public. Banks need to step up and do their best to create a system that can not default or fail. Many economists will say we gave out lots of loans and they failed. And now they think they need to tighten access to loans; which is totally wrong.
Financial Institutions need to provide much more loans, to pull us out of the mess. Having loans pay loans is a long term plan and it can be setup so banks can always be assured to get their money. When loans are paid, this establishes new Credit Appreciation, and the ability to establish value to the said properties.
Equity hedging is becoming a thing of the past, because in reality it is not security to a bank. Security to the bank is having stable housing appraisals, which neither increases nor decreases in value.
In fact Banks have everything to gain in such a new standard, because actually their books will reflect double mortgages on a single residence or property, giving them greater returns and maneuverability toward other market relationships.
If banks don't do their job as I suggest; housing markets will never recover, and the same old problem will remain. We need to get banks to loosen up and enact a 2 Loan Mortgage Policy so home mortgages remain stable. This plan is not like taking a 2nd mortgage on a loan. It is the idea that one loan covers the house, while the other loan makes payments on it and itself, until the money runs out. Then you will have a solid history of repayment, qualifying the person to take out a new loan again to keep making the payments. This is Credit Appreciation.
In today's world we do it with credit cards all the time, by paying ones installment with the other. Borrow from Peter to pay Paul is a strategy that saves the markets, and saves creditors their credit ratings. So open up the loan system and provide the 2 Loan Mortgage Policy instead of tightening it up as they are doing now. This will establish a new banking regulatory called The 2 Loan Mortgage Statue Stability Act.
To assure banks get their money; banks don't have to make the money available to the people on the outside, in other words the 2nd loan mortgage policy would be held in a Bank Management Fund, where these funds are strictly used for making payments on the 1st loan. This is so the banks don’t worry about losing the money, in which people maybe using it for something else.
Banks need to make a 2nd Loan Management Fund so money is easily transferred to pay on the 1st loan. People and Banks will not have to worry about outside economic forces ruining the pay back process to the banks. This creates security and stability. When people have their homes assured in being paid, they can go about doing other things in making money, and creating products for the economy.
Where we fail is when we do not have the 2nd Loan Policy, and we leave everything up to the production forces in the economy, hoping that we will keep our jobs, and make the needed money to make the monthly payments on the loan. Things inevitably fall apart, people lose jobs, they can't sell the home, and they have to move. America is a gypsy society always on the move, no wonder economics fail, neighborhoods disappear, and no one knows each other. We need to stop this.
There is just too much pressure on the individual to do all these things, and banks hope and think they are going to maintain some sort of worthy credit rating?
It doesn't work and certainly that is why everything is crumbling. We need the 2 Loan Mortgage Policy. Our financial services are changing from Equity in acquiring a loan system, to a Credit Appreciation system in acquiring a loan. This only means the needed relief all Americans and Banking Institutions are in need of.
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