Send a Tweet
Most Popular Choices
Share on Facebook Share on Twitter Share on LinkedIn Share on Reddit Tell A Friend Printer Friendly Page Save As Favorite View Favorites
Exclusive to OpEdNews:
OpEdNews Op Eds

1 to 2 % Home Mortgages -- why not?

By       Message Martin Carbone       (Page 1 of 1 pages)     Permalink    (# of views)   2 comments

Related Topic(s): ; ; ; ; ; ; ; ; ; ; (more...) ; ; ; , Add Tags  (less...)
Add to My Group(s)

Well Said 1   Valuable 1  
View Ratings | Rate It

Author 24749
Become a Fan
  (1 fan)
- Advertisement -
(A) Congress should pass laws that will prohibit mortgage-issuing institutions from selling off the loans they provide for mortgages. That will insure that the lenders want the loans to succeed and be paid off. It will make sure that the lenders are prudent. That should stabilize the future housing markets by removing the temptation to "bundle" mortgages into strange financial instruments. The lenders will have to learn to live on the interest from their loans. That should not be difficult -- it was always the way things were done in the past. Had that been a law 10 years ago -- our banking and money collapse of 2007 to 2009 would probably never have happened -- the old-fashioned system of home mortgages would have guaranteed good loans by a vigilant local-bank system of lenders.

(B) Fannie Mae and Freddie Mac were evidently established to buy existing loans from banks in the mistaken notion that banks need existing money, deposits or reserves to make loans. That may have been the biggest legislative blunder of all time. Fannie Mae and Freddie Mac have no useful purpose -- banks do not need existing money to issue new loans. They can create the money they need when they have found a reliable borrower(s).

(C) The bank's right to create new money arises somewhat indirectly through the Constitution that specifically and clearly gave that right and obligation to Congress who then wimped out and transferred that hot potato to the Fed. (illegally in my opinion) who then gave that right to their member banks. As a result -- banks can create any amount of money through loans.

(D) As far as I can find, there are no real restrictions on how much banks can lend -- except of course (1) the ability of the borrower to pay the loan back (2) adequate collateral that can be seized if the loan is not paid back (3) a legal system that will enforce the terms of the loan contract (4) rules that prohibit banks from lending more than a certain amount of their total loans to any one borrower or related group of borrowers and (5) rules that prohibit banks from lending more than a certain amount of money to employees or owners of the bank and businesses or corporations controlled by the bank.

- Advertisement -
(E) There should be specific and detailed laws (1) that require all banks to rigorously perform "due diligence" when considering making a specific loan to a specific prospective borrower. Those rules should be passed by Congress in formal legislation and not be allowed to be set (or hidden) by various agencies in their operational rules and regulations.

(F) Financing -- Currently, Interest rates on mortgage loans for buyers of a single family home are a large part of the cost of the home. That can be dramatically changed.

Because --
home ownership is desirable (I think there are a few pieces of formal legislation and presidential declarations to that effect),
(2) the money for mortgages can legitimately be created out of thin-air in accordance with existing law and practice,
(3) It takes very little effort by banks to cash mortgage checks,
(4) mortgage loans are the safest of all loans If due diligence is done by the lender with regard to only two easily determinable things --
(a) the market value of the home and
(b) the ability of the buyer to repay the loan --
the interest on new mortgage loans can easily be reduced to 1 or 2 %.

- Advertisement -
That will obviously revolutionize the American way of life. Why don't we get started tomorrow, 11/2/09?

The only group of people that will suffer are those banks that are now holding mortgages above 2%.

Why should they be protected by from legitimate sensible competition?

If we would energetically get started now, I believe we could solve all our economy's problems by the first of next year and start a wealth boom that would expand to cover the entire world within five years.


- Advertisement -

Well Said 1   Valuable 1  
View Ratings | Rate It

Retired engineer, product and business developer, inventor (six patents). Currently (a) trying to completely understand our money and banking systems and (b) planning to pass that information to the American public. Photo is ca. (more...)

Share on Google Plus Submit to Twitter Add this Page to Facebook! Share on LinkedIn Pin It! Add this Page to Fark! Submit to Reddit Submit to Stumble Upon Share Author on Social Media   Go To Commenting

The views expressed herein are the sole responsibility of the author and do not necessarily reflect those of this website or its editors.

Writers Guidelines

Contact AuthorContact Author Contact EditorContact Editor Author PageView Authors' Articles
- Advertisement -

Most Popular Articles by this Author:     (View All Most Popular Articles by this Author)

Is cholesterol dangerous?

How to stymie corporate political lobbying and advertising

Solve our Home Mortgage, Money and Banking Problems through Community Banking Plan

How did Paper Money come to be?

I am Changing my mind on Fractional Reserve Banking

Questions About Money for the American Public