Giving the same boost to new home buyers would certainly be a great stimulus for Home sellers and builder but it should not compete for the funds necessary to first re-fi existing home owners. If it were added to the plan, it would be imperative to require a 20% down payment and of course be ABSOLUTLY limited to one home per family in an owner occupied residence. Absent that we could just be setting ourselves up for a replay of the excesses.

2) The taxpayers don’t pick up the tab for the grace period; the interest rate is higher so as to cover the year of no payment. I. E. an additional 1/30th of interest rate on a thirty year mortgage. Lenders have been regularly giving periods of a few weeks on Re-fi’s for some time now.

3) No, those are outright expenditures for value actually or allegedly received. Those outflows are not like aren’t on money (interest) which can ,in this plan be reduced by lowering the cost of funds from the Fed to the lenders

Hello Peter

Your suggested plans to quickly restart and boost the USA Economy by lowering the
debt loads (interest rates, mostly) (but also, monthly-payment-postponements) of
consumers are worthwhile.

I would go a step further and consider or include three additional things:

(1) Existing Homeowner Mortgage 1-year-payment-postponements should be broadened to
include all NEW-Home-Buyers, for their 1st-year of mortgage payments. This would
then become an ongoing (everlasting) boost and incentive to get people to buy NEW
homes (or buy existing older-homes, for initial buyers).

(2) Under both scenarios, the Taxpayers apparently pick up the tab for those postponed
payments. I think that’s wrong. And is unnecessarily costly to the Government.

Instead, the 1-year postponements should be tacked onto the far end of the mortgages.
That puts the burden back onto the purchaser/consumer, where it belongs. But it gives
them some breathing room, as well as the boost in their spendable leftover income.

(3) We need to ask “whatabout the Property Taxes and Insurance during the 1-year delay?”
Is there some way those could be (mandated) to be postponed as well? Or what? Or how?
If they could do that (too) it would add considerable leftover spendable income.

As an aside, I want to mention that, in my opinion, much of the current media ballyhoo’d
“credit crunch” may be a myth. Or not as bad as they tend to say it is. And I suspect the
myth driven by big New York banks, in order to get more TARP handouts to fleece the govt.

Examples:

A lady recently Posted at the EagleRanch Forum, about easy availability (for her) of new
car loans. She pre-qualified, but did not need it just yet. That was ok’d by her bank;
yet her bank continues to frequently phone her asking “is she ready yet?” The point is
that her bank is very eager to make those auto loans.

That example, and the next example, may be because LOCAL banks are ready willing and able
to make such loans. Because they are, and have always been, out of the big NY Bank elitist
and ripoff-the-government-taxpayer loops.

Another example, is in the Portland, Oregon area: One large well known quality Contractor
has a large inventory of unsold NEW homes. Nice homes. Good areas. And they are running
TV advertisements every night on all stations telling people they will get an easy 30-year
FIXed, 3.78% mortgage. The ads have a Link to their website listing all the homes/details.

One last example: As recently as two months ago, my mailbox was cluttered with regularly
spaced junk mail from one of the nationally known Mortgage companies. They were offering,
and pushing, 40-Year FIXed rate mortgages! As I recall the rate was below 5% on those.

If there is indeed a “credit crunch”, and if the big NY banks aren’t doing their job to
make business and consumer and mortgage loans as widespread as they could be, then I feel
it is time for the government (Treasury) to creat a National Consumer/Business Lending
“Bank of first resort”. The overall recovery of the economy is more important than any
so-called or perceived notions that it isn’t the government’s business to do that.

When the going gets tuff; The tuff get going. It’s time for the Government to get tuff.