Separate the Housing Market from the Workplace/Economic Market

The International Institute of Nonviolence
News&Opinion
By: Rev. Jermano

I want to explain in a series of articles how we can solve this banking crisis in the USA. Our Banking Guru's ( Greenspan, Bernake, & Paulson), don't have a clue, or they would have seen it coming long ago. Even the President of the United States and the current Candidates Barack Obama and John McCain do not have a clue to this...So I will do my best to help sort out this trouble

Our problem is we have no homeownership stability. We need to try to establish stability in homeownership, while assuring that the banks get repaid for the loan taken out on the home. Also the problem is determining the real cost and value to a home. There has been this idea that if you can sell it for a profit it is worth the risk..example  selling a trailer on an adjoining lot in L.A. for 1 million bucks...now that's nuts.

We need to separate the housing market from the economic market in order to establish stability for real home values.. If we can separate homes from the work place environment we establish stability and a secure investment, that only influences its own value.

For instance....Real .people buy homes with the hope of living there....(Obviously some people don't; and want the home as a means to jump on the perceived upward trend of home values everytime it changes hands from sale to sale....ultimately making home values have false values. I call that Inflationary home Equity profit taking. or The Equity Inflating People)

But there are the Real people who want homes and to live in nice neighborhoods and to create a good credit rating, and live the American dream. This is the real value home price homeowners, that banks like as customers.. These people want to make their payments on time monthly...but the problem in America is that the Work Place Environment, which I also call the Economic Market fails and people lose their job... In reality the Work Place Economic Market is almost always unstable....and banks rely on it as a means to acquire monthly payments from homeowners?!  Really the last sentence is a statement because Banks rely on this unstable workplace environment but I put a question mark because why would they do that? It is quite risky.

This is a problem for banks to do such a thing because ...This causes The Equity Inflation People to go into action as a means of survival they pursue home sales which become more frequent causing an upward trend to home value which ultimately means false values...The banks get stuck with high value loans that sooner or later the value can not be justified and the loan goes into default, and they can't sell the home again because the value is not real.... Thus hello bankruptcy to the thousands of banks who have many of these type of loans.

The Real People face a different problem and that is they bought in good faith the home, but the unstable workplace environment failed and they lost their job, and are unable to make the payment on the home...This does two things....they either are able to find another job in the same area where they bought the house, or they are forced to sell the house in order to move to a new unstable workplace environment and the same bad thing happens there. It is a vicious circle....and banks are lining up in a queue scratching their heads.

So what to do? We need to Separate the Housing Market from the WorkPlace Environment. We can not get stability from an unstable workplace environment. Banks blame people as credit risks when in fact that is not the problem. The workplace environment is the problem. So how can banks operate and get the stability they need?

Banks fail now because the banks are relying on the Real Estate Holdings....and it should be the other way around... Banks will be successful when Real Estate Holdings rely on the Bank. How does this happen? Banks have to create a stable environment where they operate to assure them a return on their loans, without the perceived need from the unstable workplace environment. When banks do this it won't matter if people lose their jobs. This stabilization process would take pressure away from the workplace environment so people can work on plans to make that environment stable....but that will be another article topic in the future.

If banks adopted :

2 Loan Policies for Mortgages, we would never have these issues. People would not be worrying about how to pay their loan, because the bank offers a service in how they can keep their homes. This makes the bank more secure, and it makes the housing market more secure and stable. Remember we need to separate our homes from the economic factors workplace environment. One can not rely on the other. Presently both are unstable.

If we have our homes secure with the 2 Loan Mortgage Policy; having to deal with an outside  unstable work place economic factor; does not become a concern. We are assured that methods to provide secure funding from the bank comes into being. Our banks become the desired value of equity holdings instead of the Real Estate. And when people do business with that bank....they become the co-equity holders not the Real Estate.

With the 2 Loan Mortgage Policy people won't have to worry about being laid off from work, since most people are on fixed incomes. As long as payments are made, and the banks obligations are met, then banking and home buying will go on indefinitely.

Presently Banks create the risk, because they don't provide a means to separate the Housing Market from the Workplace market. Banks can't blame the public. Banks need to step up and do their best to create a system that can not default or fail.

Financial Institutions need to provide much more loans, to pull us out of the mess.

Having a 2nd loan pay the 1st loan is a long term plan and it can be setup so banks can always be assured to get their money. When loans are paid, this establishes new Credit Appreciation not only for the banks but for the home buyers, and the ability to establish real value to the said properties is established.

Equity inflating/ hedging is becoming a thing of the past, because in reality it is not security to a bank. Security to the bank is having stable housing appraisals, which neither wildly increases nor decreases in value over time.

Banks are in the business for giving out loans. People want credit, so it is not about equity we build. It is about credit worthiness or Credit Appreciation in making payments and never thinking about defaults.

Of course you have questions but I will tell you more in the coming series.