There is no simple way to bring back the residential housing market.
Right now most people have little confidence in Congress, which is why they have a 9 percent approval rating.
In past recoveries, the construction sector grew about 3 percent and today it is down almost 10 percent.
Granted there are more than 20 million households who have "doubled up" by moving in with family or friends.
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But there are simple concepts that our Congress can do to help ease the pain.
First, we have an estimated 16.5 million homeowners who are "underwater" on their mortgages.
Many can’t refinance because their income or appraisal on their home or their poor credit score holds them back.
Here is a bold, but simple, idea.
If homeowners are current on their mortgage, let them refinance by charging them a simple $500 fee which can be "written" into the loan.
It is real simple: We need to reward people who have paid their mortgage faithfully.
Instead we gave $26 billion of tax credits to first-time home buyers, many who were buying houses anyhow.
Simply put, we need to reward those who have been faithful. We need to provide them with hundreds in extra monthly savings, which will eventually flow into construction projects, and prepayments of principal, which will improve and stabilize the overall market.
We also need to let immigrants who want to be able to “fast track” into citizenship, if they can afford a down payment on a primary residence.
I know the critics don't want a "pay to play" system where some folks get fast-tracked because of their wealth. But now you have had a porous border for the past 25 years where millions come here illegally and have disregarded the laws.
It's time we bring in some folks who actually want to invest in America and will spend their wealth in our great country.
Lastly, an agreement needs to be reached with the 50 state attorneys general and the big banks over the damages from the housing bubble. The banks are willing to pay $25 billion, much of which will help underwater borrowers and those who defaulted on loans in the past few years.
This has slowed the foreclosure process because the banks don't want to foreclose as fast as usual if they are going to prepare a settlement.
However, in the past 13 months nothing has been agreed to. Many state attorneys general are doing what politicians do best. Posturing and demonizing the evil banks.
Meanwhile millions of homeowners haven’t been granted relief. Both parties agree the banks have done wrong. But without giving them immunity going forward, the millions of homeowners continue to suffer.
Congress and the president need to craft a bipartisan solution to this or at least give them a deadline.
The Obama administration is supporting a settlement, but many fellow Democratic attorneys general continue to put "justice" and their political interests over the millions of homeowners. If these states sued the banks, the legal process would take an extra four to seven years, which does nothing to help the borrowers who were wronged.
Don’t let the perfect be the enemy of the good.
About the Author: Bill Spetrino
Bill Spetrino is a member of the Moneynews Financial Brain Trust. Click Here to read more of his articles. He is also the editor of the Dividend Machine. Discover more by Clicking Here Now.
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