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Okay – so not really.  But seriously think about it.  Here's what it would look like.  President Obama is sitting at the kitchen table at the White House, yes, the White House in Washington DC; this is, after all, his personal residence. He looks at his Finances and immediately determines that he has to do something and soon. There is no way he can afford to continue paying his current mortgage and interest on his home, the White House.

So, he tries to call a mortgage broker, but this proves to be difficult as he can't find a mortgage broker still in business.  The president then decides to call his bank – the bank of China.  He tells them that he needs to reFinance his mortgage. 

The bank says, “No problem Mr. President, your account is in good standing with us.” 

The bank then orders an appraisal and comes to find out that the president’s primary residence, the White House, is now not worth what it was, in fact the White House has dropped in value by more than 30%, making the president’s current mortgage more than the value of the home. Join the crowd, I say.

The president then has to decide what to do and to make things worse he just realized that he had an adjustable rate mortgage with a pay option ARM and the mortgage is set to adjust in the next few months.  No way will he be able to afford the new payment.  So, he calls the bank again and asks for help. 

The bank says, “Sorry Mr. President, there’s nothing we can do for you.  I would suggest that you call and apply for the HOPE NOW program.”

But WAIT, the representative at the bank says, “I'm sorry Mr. President but you don’t qualify, you are current on your mortgage.” 

The president then says, “Yes I know, I also have perfect credit.”

The bank representative replies, “Well, I am sorry there is nothing I can do for you, if you are 60 days late then we can give you a four percent fixed rate for 30 years, as well as lower your mortgage amount to 85% of the current value.  But right now you are current on your mortgage.  When will you be making your next payment?”

The president, now frustrated as every other American that owns a home today is, says, “You have to be kidding me, the only way to get help is to stop paying my mortgage so that I can qualify for help.  That doesn’t make any sense!  If I am going to be late then you can have this old White House, I don’t want it anymore…it's just not worth it.  I can do a deed in lieu of foreclosure and walk away. The Bank of China can foreclose and sell it to someone for 30 cents on the dollar while I am going to go buy the new White House next door for 30 cents on the dollar and start over.  So, what if I have a ding on my credit, it’s a onetime issue and I can be done with it!”

This is only a parable, but in reality the majority of American home owners are facing this exact same situation.  Why should I be a financially responsible home owner and pay my mortgage on time only so that my neighbor can stop paying on his/her home, live in it for the next year or so rent free and then walk away from it, only to have the bank take it back and sell it for 30 cents on the dollar?  Or my neighbor just stops paying for 2 months and then applies for the HOPE NOW program, only to get a new re-forecasted mortgage for 85% of the current value, fixed for 30 years at four percent? This makes absolutely no sense. You can forget about any stimulus plans because if you don’t solve this problem quickly then the majority of home owners are going to just walk away from their home loans. This must be solved first. You solve this problem and you instantly put money in the pockets of American consumers. The consumer sentiment goes up and the economy gets real stimulus.

To examine this plan in greater detail, I invite you to read my blog at www.jamesdicksblog.com entitled I Need a Job – Not Stimulus. I have laid out a comprehensive plan on how we can get money flowing to consumers, as well as from consumers to business.  All we have to do is do it.  Like I always say, “If you always do what you have always done then you always get what you have always gotten.”

Happy Investing -

James Dicks

About the Author:

www.whoisJamesDicks.com -For more than a decade, James Dicks has been one of the nation's leading educators on the subject of Real Estate, Stocks, Options, the Foreign Exchange Market and empowering investors to handle their own investments. James is living his dream by helping investors and businesses overcome the hurdles of reaching their financial goals. Millions of people have heard James’ message of diversification, money management and financial freedom and thousands have attended one of his many free workshops. Increasing investment knowledge is James' goal and he strives to reach this goal by using a common sense approach that investors of all types can utilize on their road to financial freedom.

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