Saturday, March 27, 2010

Switching Homes to Address Crisis

         SWITCHING HOMES TO ADDRESS THE HOUSING CRISIS


     Why is it not possible--or of no consequence--to have families move out of more expensive homes which they cannot afford into lower priced homes which they can afford, and that exist within the same general areas or within distances which do not cause an reasonable travel inconveniences and expenses to workers and families?  

     For purposes of illustration, two methods are suggested, using the following simplified numbers and situations representing various home buyers:

    HOME OWNER                     MORTGAGE                              MONTHLY NOTE

               (1)                                      $800,000                                        $8,000    
           
               (2)                                        600,000                                           6,000

               (3)                                        400,000                                           4,000

               (4)                                        200,000                                           2,000

               (5)                                        100,000                                           1,000

METHOD I
     Suppose that home buyers (1), (2), (3), (4), and (5) are in homes they cannot 
afford but can afford one of the lower priced homes listed.  Each homeowner could be allowed to assume the mortgage of one of the less expensive home that the family can afford, maybe the most expensive home the family can afford.  Ideally, (2 )has a home and monthly payment (1) can afford; homeowner (2) pursues the home of homeowner (3); and homeowner (4) buys the home of homebuyer (5).  The point is to get families into homes they can afford at this time.  The home of home buyer (1) could be sold as described in METHOD II.

     All mortgages that are endangered would be identified, and arrangement made, with government help, to work out exchanges among the lending agencies and home buyers.  Government financial interventions may be used, where needed, to expedite the mortgage exchanges.

METHOD II
     Suppose home buyer (1) can no longer afford a monthly note of $8,000 but can afford the monthly payment of $4,000 on house that Homeowner (3) owns.  And suppose Homeowner (3), whose house is paid out, would like to--and can afford to--buy a larger house, maybe the one home buyer (1) or (2) is buying.  Let them switch homes, with (1) now acquiring a mortgage on the home owned by (3), who would use that money paid for his home as down payment on the larger home.     

     Why would these not be possible--and practical--within a defined geographical area? And why might it not be possible even over a wider area if homeowners are willing, and find it to their advantage to travel farther to work if they can keep and live in their own homes?  A tax credit for gasoline and toward the purchase of a new car for transportation might be offered.

     In each case there would be a problem of matching compatible homeowners.  But whatever can be achieved might be worth the effort.

     Something similar happens with renters:  When family incomes become less, families move to apartments where the rent is lower. 

Ronald C. Spooner

Wednesday, March 24, 2010

Starting Health-care Reform with Blank Sheet

I have tried to figure out what would be the process of starting over in developing a new, bipartisan health-care bill, starting with, as Republicans call it, "a blank sheet of paper." Would that also involve somehow starting over with blank minds.
Every attempt to change or replace an existing program, set of by-laws, or other guidelines for operation, some person or group decides that some process needs to be either initiated or changed. There is seldom, if ever, a group of people assembling to decide what is needed or what needs to be changed.
Now, in the case of Health-care reform, if blank sheet means that nothing has been written down by when those responsible for writing the rules or guidelines, I can understand that. But that would not mean that participants would not have ideas written down in their minds or on their own pieces of paper.
So let's suppose there is a blank sheet of paper on which the eventual plan is to be written, how would the discussion begin? With the chairman asking if anybody has an idea about what needs to be done or how the group should proceed?
Suppose someone suggest that the first item to be discussed in formulating a health-care bill would be those to be covered by the bill. One party likely would support one level of coverage, and the other party another level, especially if party member have previously discussed the matter among themselves. Would such prior discussions be appropriate. One would expect that some prior thought would have been given to ideas before they are recommended for consideration. Otherwise, how would a committee member be prepared to justify the recommendation.
It makes sense, therefore, that each member would come to the committee meeting with ideas and their implementations written down in their heads or on paper. It would help if these ideas were not previously discussed with other party members. Members would them feel less inclined to support ideas simply because the committee member is a member of his or her party.
But that is where the problem lies.