SAVE the AMERICAN DREAM

I just finished reading the " Big Short" by Michael Lewis and the "Greatest Trade Ever" by Greg Zuckerman. Now I know where the money went. We really need some reform in the lending, mortgage, banking business and maybe we need to own up to our own mistakes as borrowers. In any event the system is AFU but maybe we can fix it and find some redemption. There were a few winners as a result of the mortgage meltdown. They are listed in the two books. They earned a lot of money. Ungodly amounts. More than a majority of the American people put together will probably ever have. Wall street got 700 billion. AIG alone got 180 billion. It was a loan right? The government really should have checked with the American people before handing out the money. There is need for accountability and reform in that one act but that is a topic for a later discussion. For now, I have a plan to help those facinf foreclosure and/or get people back in their homes if they lost their home. It requires the winners of the mortgage meltdown to work together along with our government. I emailed Michael Lewis to see if he is willing to broker this deal and speak with these gentlemen. Help me get the word out. Ok here's my plan:

Get the bailout back ASAP, the government calls the loan due. Foreclosing on Wall street essentially. All the winners of the greatest trade pool their resources and with their money and the taxpayers money we form a new bank to buy up all the toxic loans outstanding and possibly buy up all the bank owned homes. All homeowners who fell victim to the 'doomsday machine' get in line to get their house back. Or if they already lost their home then they will receive help to get another home under this deal. They bring documentation proving they had a bad loan and got sold more than they could afford.
The new lending company agrees to adjust the repayment time to however many years it will take to repay the loan and keep the payment affordable, say 25% of a borrowers earnings per month? That's what it was in the 1960s on average. The borrowers will probably never pay off the loan because they are still on the hook for the original loan amount. When the homeowner decides to sell or dies then, the loan is ASSUMED by the new owner.All the loans must be assumeable. Just like some FHA or VA loans. Sure there are lots of details that need to be worked out but that's the simple version.
Here's the email I sent to Michael Lewis:

Hi Michael, just finished reading your book the Big Short. Great writing. You are the first one I heard (on NPR) explain what happened and where the money went. I myself was a victim of the "doomsday machine" for a couple of years (took one of those bad loans in Jan 2005 to buy a house, re-fied in March 2007 and plunked more money down to save it...) I have a plan to save the American Dream.
I have been thinking about what to do for all the rest of the folks out there who are facing foreclosure. I'm no genius but here's my idea. So far no one has listened to me. Tell me if I have a fart in my head:
The big money winners of the CDS deals are in trouble. Maybe. The public may want to lynch them all. I think they may have played by the rules of the game. Maybe. According to your story some of them have a half a conscience. So maybe they will agree to help all the losers that took it in the ass. Maybe. But in any event they can be the Greatest American Heroes of this whole mess if they will work together. And my small favor to ask is that you broker the deal.

1) Gather the boys all together, Paulson, Burry, the guys in Berkeley from Cornhole , and all the rest of the winners, Lippmann, Eisman etc.. Pool their resources and form a martgage bank. They buy up all the outstanding toxic loans and possibly all the bank owned foreclosures. Short of capital? Ok, maybe try to get some if not all of the bailout money back.

2)Negotiate the loans with the homeowners. Whatever interest rate, preferably a fixed rate, no more option ARMS or any of that kind of BS. Adjust the monthly payment according to what they can afford. The term may be 30, 40, 50, 60, 70 years whatever. It is a long term commitment to fix this mess.

3) Make the loans assumable. The homeowner gets to stay in his home. They may never pay it off, the lenders hold the title, a new owner takes over after the first owner dies or sells the home. Someday the house gets paid for and the loan is paid off. Maybe the housing prices go up, maybe they stay flat. Either way the payments keep coming in.

.4)Provisions: no 2nds allowed against the property, the homeowner understands he still owes whatever the debt is (unless the new lenders agree to mark it down...) and whatever else will make this work.

I know I am a simpleton when it comes to money perhaps, and I'm sure there are a lot of other things that need to be worked out but that's it in a nutshell. Let the smart guys figure out the details. Thanks for listening, Julio Gamarti