A real estate consulting firm has determined through research and analysis four initiatives needed to stop the downward spiral currently affecting housing, finance and the economy at large
“It’s clear that the general economic environment and the housing market woes are intertwined,” says John Burns, CEO of Irvine, Calif.-based John Burns Real Estate Consulting.
The report identifies the following initiatives:
1. Stabilize The Banking System — Save local businesses by saving the local employers’ bank.
- Continue insuring deposits up to $250,000 and unlimited amounts in payroll accounts.
- Close all poorly managed and undercapitalized banks as soon as possible.
- Keep lending money to stabilize the best and largest banks.
- Properly dispose of bad loans.
- Finance new banks to create competition for good loans.
- Continue supporting commercial paper liquidity.
- Continue liquidity guarantees on new bank debt.
2. Stimulate Job Growth — Bring more jobs to the economy with short-term stimulus and smart government spending.
- Fund infrastructure projects to create jobs.
- Stimulate short-term and long-term spending while recognizing that long-term saving is also needed.
- Allow companies to utilize their current losses to recapture taxes paid over the last four years so they can keep enough cash in the bank to meet payroll.
- Create government-backed initiatives to help banks make good loans to employers.
3. Stimulate Responsible Home Buying — Stop home price declines by stimulating home buying by responsible individuals, to bring demand and supply back into balance.
- Keep mortgage rates low.
- Keep Fannie and Freddie lending and FHA insuring.
- Temporarily provide a down payment match to all home buyers at a cost of approximately $40 billion.
- Temporarily double the mortgage interest rate deductions for all homeowners at a cost of $188 billion per year.
4. Support Responsible Loan Modifications — Stop home price declines by helping keep responsible people in their homes.
- Provide financial incentives for loan servicing firms to modify loans.
- Create a vehicle to buy loans that have been responsibly modified.
Sounds like a plan.