I need your help to draft a plan to stop the recession.
Yeah you read that right.
Maybe we here can do what Wall Street cannot and WILL NOT Maybe together, we can hatch a plan to help people pull themselves out of mortgage hell, save the banks and hold up the economy. But I need information.
Here is the story in a nutshell.
After WW1, vets tried to pay off their mortgages with war bonds to stop foreclosure of their homes and farms. The banks did not want to take the bonds. The Supreme Court ruled against the banks on the basis that printed money was a BOND backed by the US government.
Further, no bank could discriminate against the different types of bonds provided those bonds became due within 5 years of the mortgage.
Moreover there was no difference between banks buying bonds to collateralize debt and a person buying a bond to collateralize her debt. The times were extraordinary and called for extraordinary measures that extended finanacial respnsiblity to the individual from the Federal Government to hold up the banking system,
To my understanding,, the court in the Jimmy Carter years upheld this ruling.
What this means is that a homeowner with a $200,000 mortgage could buy long term bonds -due within 5 years of the mortgage. They could buy them at theoretically $.10 on the dollar or $20,000. These bond could be used to pay off the full face value of the loan, The bank that holds the bonds clears the loans off the books immediately at FULL FACE VALUE!
Further the banks could lend the home owner the $20,000 to buy the bonds. Now their house payment is in line with a car payment.
And that long term government bonds are bought to back those loans holds up the community (municipals bonds), county and state and federal government.
I would also imagine that people who have already lost their homes and are in financial hell can use this plan to pay off crippling debt
This is a win/win situaton all arround.
This is all theoretical. I need information to know if this is true. Can any of you give me feed back?
Can anyone tell me if this can work as I was told it could work ?
Can anyone sight the laws that can back it up?