Skip to main content

$75 Billion Mortgage Rescue? There Is A Better Plan

The new mortgage plan may help to extend repayment period, reduce rates or even result in some reduction in the outstanding mortgage. We can argue till the cows come home, but its a band aid.

I am disappointed that there is a complementary solution staring them in the face and no one is doing it! If you are throwing $75 billion to save those in trouble, what about those who are not in "need" - you can be fairer and at the same tackle the issue better.

My plan, use $50 billion for the above plan, and use another $50 billion to spur the demand side. The problem with falling property prices is not just foreclosures and negative equity, its also the other side of the equation - the demand.
The other $50 billion should be used to give out $25,000 max for every new buyer who qualify (really qualify) - i.e. verified income, verified affordability according to the textbook on approving loans, with a minimum down payment of 15%.

The $25,000 will be credited to the pay down the mortgage once a year over 3 years, it will reduce the new owner's monthly payments every year for 3 years. New owners will get up to $25,000 or a max of 10% of the price purchased. As these are new mortgages, they should have a low fixed rate of 1.5% plus BLR or a max rate of 4% for the first 5 years.
Not only will you get fresh genuine demand but these new loans are more defensible and of a better quality thus underpinning the buyers' strength. This brings an immediate balance to the equation, fresh demand, fresh buyers. Hey, even if you already own two houses but if you qualify, you can buy.

$50,000,000,000 divided by $25,000 = 2 million new buyers.

The expectation of genuine buyers flowing in will re-energise the markets. Somebody please pass this to Tim Geithner!

p/s photo: Ha Ji Won


see said…
The saving housebuyers in trouble is mere politics lah. You mean something similar to Australia's scheme ie giving to first time housebuyers. Like that I also wanna be housebuyer in Oz, unlike here I get nothing for all the taxes I pay....also have to pay neighbourhood security
solomon said…
I am no genius of financials.

For the good or going to be delinquent loan, so long the rate of refinancing could end up with monthly instalment 30-40% lower, they will free up some monies for the consumer.

For the bad loan, a dollar for dollar matching incentives for limited period shd be considered. Says, for qualified defaulter who can pay $1000 over the monthly $2000. US govt could consider payout of $1000 if they paid up. It is better than giving a lump sum saviour amount.

While all the revamping or queries going arounds the world, I think the native answer to this is the job market. Need to continue to create more jobs in financials, auto and many more.
Jasonred79 said…
"Hey, even if you already own two houses but if you qualify, you can buy."

This is exactly one of the things they are trying to avoid.

They're trying to *save* existing homeowners, not prolong the existing housing bubble deflation.

What is someone who already owns 2 houses supposed to do with another house? Live in 3 at once? Turn 1 house into a birdfarm (we actually do this in Malaysia though, lol)

It is the whole "I don't need a house, but I'll but one for investment" mentality that causes housing bubbles in the first place.

... In some areas in the melaka and Johor now, the current number of houses is 1.4 times the number of households. The number of shoplots has reached 2.5 times the number of open businesses in Melaka town. SHOPHOUSES have a 30% occupancy rate in Melaka town! This is clearly ridiculous, and a day of reckoning is coming.

Popular posts from this blog

My Master, A National Treasure

REPOST:  Its been more than two years since I posted on my sifu. This is probably the most significant posting I had done thus far that does not involve business or politics. My circle of close friends and business colleagues have benefited significantly from his treatment.

My Master, Dr. Law Chin Han (from my iPhone)

Where shall I start? OK, just based on real life experiences of those who are close to me. The entire Tong family (Bukit Kiara Properties) absolutely swear that he is the master of masters when it comes to acupuncture (and dentistry as well). To me, you can probably find many great dentists, but to find a real Master in acupuncture, thats a whole different ballgame.

I am not big aficionado of Chinese medicine or acupuncture initially. I guess you have to go through the whole shebang to appreciate the real life changing effects from a master.

My business partner and very close friend went to him after 15 years of persistent gout problem, he will get his heavy attacks at least…

PUC - An Assessment

PUC has tried to reinvent itself following the untimely passing of its founder last year. His younger brother, who was highly successful in his own right, was running Pictureworks in a number of countries in Asia.

The Shares Price Rise & Possible Catalysts

Share price has broken its all time high comfortably. The rise has been steady and not at all volatile, accompanied by steady volume, which would indicate longer term investors and some funds already accumulating nd not selling back to the market.

Potential Catalyst #1

The just launched Presto app. Tried it and went to the briefing. Its a game changer for PUC for sure. They have already indicated that the e-wallet will be launched only in 1Q2018. Now what is Presto, why Presto. Its very much like Lazada or eBay or Alibaba. Lazada is a platform for retailers to sell, full stop. eBay is more for the personal one man operations. Alibaba is more for wholesalers and distributors.

Presto links retailers/f&b/services originators with en…

How Long Will The Bull Lasts For Malaysia

Are we in a bull run? Of course we are. Not to labour the point but I highlighted the start of the bull run back in January this year... and got a lot of naysayers but never mind:

p/s: needless to say, this is Jing Tian ... beautiful face and a certain kind of freshness in her looks and acting career thus far

I would like to extend my prediction that the bull run for Bursa stocks should continue to run well till the end of the year. What we are seeing for the past 3 weeks was a general lull where volume suddenly shrunk but the general trend is still intact. My reasons for saying so:

a) the overall equity markets globally will be supported by a benign recovery complemented by a timid approach to raising rates by most central banks

b) thanks to a drastic bear run for most commodities, and to a lesser extent some oil & gas players, the undertone for "cost of materials" have been weak and has pr…