Miami, FL Oct. 24 - Economist Farid A. Khavari spoke out on Florida's growing housing crisis to a group of supporters yesterday.
"Unemployment brings more foreclosures, and foreclosures create more unemployment," said Khavari, who's hoping to stage a miraculous come-from-behind victory to become only the second independent in history to capture the Florida governorship.
"Without a strong construction industry, Florida's economy will never recover," Khavari said in his prepared remarks. "As long as there are hundreds of thousands of foreclosed homes on the market, construction can't rebound, and unemployment will get worse.
"We have only seen the first wave of foreclosures, already about one in seven Florida homes," continued Khavari. "The impact of that will be many more foreclosures and far fewer jobs over the next two years. But we can fix this using our proposed taxpayer-owned bank."
Khavari's proposal for a publicly-owned bank has gained national attention, and gubernatorial candidates in seven other states, including Lansing Mayor Virg Bernero, the Democratic nominee in Michigan, have adopted the concept. Khavari's state bank is modeled after the Bank of North Dakota, the only state-owned bank in the nation.
Farid Khavari, independent candidate for governor of Florida by Photo Courtesy of Khavari for Governor
"Our bank can buy the foreclosed homes at wholesale prices. We can sell them at six percent more than we pay, to cover real estate sales costs. Our bank can provide 2% fixed rate mortgages for 15 years," said Khavari. "In many cases, the owners would be able to stay in their homes, or buy another one at a price and monthly payment they can afford. The state can earn billions of dollars by doing this, at no cost to taxpayers," Khavari said, adding that the additional revenue could be used for property tax reductions throughout the state.
"We can stop foreclosures, end the housing crisis, and save Florida's economy," he boldly declared. "We will create employment as fast as we reverse the foreclosure cycle," he predicted.
Noting that forty-six percent of all homes in Florida are currently underwater, the third highest in the nation behind recession-ravaged Nevada and Arizona, the Iranian-born economist said that the Bank of the State of Florida could also provide refinancing for as low as an eye-squinting one-half of one percent for troubled homeowners with negative equity -- those who owe more than on their mortgages than their homes are worth.
"We can clear the foreclosed homes from the market within a year, and construction will take off immediately," asserted the self-assured Khavari, one of five independent and minor-party candidates running against wealthy Republican Rick Scott and Democrat Alex Sink, a former president of Bank of America's Florida operations. "Homeowners will save hundreds of billions of dollars per year in interest, and that money will stay in Florida's economy."
"This program will not result in another bubble," Khavari assured his supporters. The 2% mortgages offered by the state bank will keep home prices stable for the long term, at levels that are fair to both buyers and builders, he continued. "We need a sustainable housing market, with full employment and housing prices that our children and grandchildren will be able to afford. We can make Florida recession-proof forever."
The 67-year-old Khavari, who holds a Ph.D. in economics from the University of Bremen in Germany, first seized on the idea of a state-owned bank in the spring of 2008 while writing Towards a Zero-Cost Economy -- his ninth book. His mortgage proposal is just one part of his plan to create 1,000,000 private sector jobs in Florida.
The longest of long-shots in Florida's gubernatorial sweepstakes, Khavari began airing the first radio ads of his nearly 17-month campaign earlier this week.