DARN-Deleverage America Right Now

The housing and credit crisis has been front page news for well over a year now. The problems have been articulated to the point where mortgage backed securities and home foreclosures are as likely to be discussed amongst a group of friends as the weather. Americans across the country are asking where is all this money going and why isn’t it helping to solve the problem? It is obvious to everyone that our nation needs to find ways to stabilize the real estate markets NOW or risk even greater deterioration in home prices as a result of increased unemployment and other related economic factors.

At the heart of the problem in housing today is one very simple fact…there is too much debt and not enough equity. Millions of homes in our country are worth less than the mortgage balances on the homes. Even though that may not be me or you, if it’s our neighbor and they lose their home, all homes nearby drop in value. The best solution to this problem also happens to be the least taxing to our country, we need to convert debt to equity and deleverage the housing market. Instead of using taxpayer money to modify loan interest rates or extend the term of loans to reduce payments, we HAVE to reduce the debt itself. Loan modifications don’t work because we haven’t solved the underlying problem.

The answer is for the federal government to use its resources to temporarily hold equity in troubled homes through a campaign that EARN calls “America’s Home”. In essence, the federal government would offer to refinance the homes of Americans who qualify for the program. The government would finance a portion of the qualified homes with a private sector equity instrument such as the EARN Certificate that was developed over four years ago. In return for the equity infusion, the homeowner would have a smaller loan with affordable payments and they would share the appreciation of their home as part of the program. The government would temporarily hold these equity instruments until the housing market recovers.

The point of this email is to solicit your help in getting government officials to embrace the “America’s Home” campaign. If this email and the attached document have convinced you that the program is good for America then please forward this email to friends, family, business associates, and PLEASE forward it to all of your elected officials. The link below will direct you to a page on the U.S. Congress website that will give you the names and contact information for ALL of your State and Federal elected officials. It is on the left hand side of the webpage and is called My Elected Officials. http://www.congress.org/congressorg/home/ Also please send this to your Mayor and city council members so that they can also hear your voice.

There are situations where the free market itself cannot resolve the underlying market dynamics that threaten its future. And there are times when the magnitude of those problems is so great that only government has the ability to provide an effective solution. America is at such a place and in such a time. If we don’t act now to stabilize the American housing market our economy will continue to weaken, more jobs will be lost and the downward spiral will actually accelerate.

We must remember that the government is the American people and that we as American people have a right AND an obligation to help frame the destiny of our Country. When the frenzied process of governing and managing the divergent wishes of the American people fails to produce the result necessary to resolve the problem, the people must help to provide the solution and the people must be the voice that our elected officials hear.

The time is now, the opportunity is right here in front of you, and the risk of failure is far too great. The “America’s Home” campaign is good for the American people and for the American economy. We have an opportunity to stop the bleeding and to give people in trouble hope that America can be as good as the people who are willing to fight back and survive adversity. We hope that we can count on your support.