Here is Idea #6 in our 20-Ideas campaign to give voters actual solutions to our current challenges and in our 20-steps to a Total Democracy Makeover
Marisa’s opponents are in the kowtowing business–kowtowing to party establishment, big money, PACs, and K Street. Marisa is in the solutions business. Specifically, she is in the solutions business for Main Street’s small business–your business.
In 2008 we hardworking Americans were devastated by a recession which we did not cause and lost a large portion of our savings–savings we had worked hard to earn
The tragedy is that the economic meltdown was entirely avoidable. Some of the most direct causes of the meltdown–exploitative financial instruments stemming from absurdly underfunded home purchases–were entirely legal. Had the tried and true mortgage rules that have served us well for decades been followed, the crisis in the housing market never would have occurred.
Mortgage Rules Must Be Reinstated
We should demand that Congress prohibit zero down payment loans and ensure that the Government will not back these loans. Zero down payment loans are a disaster, as we saw in the 2008 implosion of our market. These loans are unsound financial practice and should be banned. When anti-small-business financial products are allowed to infect the market, all of us pay for the gambling of uninformed borrowers and the banks that throw money at them.
Why should anyone be able to buy a home without any money down? It is a scheme completely detached from reality. Why should we allow banks to pretend that such a scheme is good for the health and stability of the housing market? Homeownership is a goal for which Americans should save and strive. It is not an automatic entitlement or something to be taken lightly.
For starter homes the down payment can be smaller than the traditional 20%, but it can’t be nothing. Down payments should be at least 7% for homes worth $200,000 or less. Between $200,000 and $400,000, the down payment should be 15%, but for anything over $400,000 it must be the tried and true 20%. And for homes over $2 million, higher.
Marisa said: “We don’t have to allow anyone to buy homes on the cheap, especially the wealthy, only to find out they can’t afford it because when things go south, all of us are stuck with their bill. And that is fundamentally unfair. If we want a healthy housing market, buying a home must have a rational relationship to the borrower’s ability to pay.”
Marisa’s solution is not only fair, but will have a tremendously positive impact on jobs and our economy by taking the extreme exploitation out of the housing and the stock market.