This idea could have a major effect on Homes for sale in Everett. Suppose just for a moment we could dream about a local government that actually did something innovative.
Everett has a surplus in its budget. Suppose we did this: Right now there are many aggressive companies out there making money off the mortgage crisis. What they do is they buy a mortgage for pennies on the dollar. Say a $250,000 mortgage for $150,000 or 60% of face value. Then they go to the borrower and renegotiate the loan and the interest rate. Suddenly someone who owed say $250,000 @ 5.75% on a home worth $210,000 now has a new mortgage for $210,000 @ 5.25%. In the end most everyone wins. The bank won because a bad loan if off the books and liquidity is restored. And they got out of the loan without delay. The borrower won because he now has a mortgage that reflects the value of his home and at an affordable interest rate. The investor won because he made money and made everyone happy. We can find plenty of homes for sale in Everett in this exact same circumstances.
I am sure we couldn’t do that here but again suppose we did this: Suppose Everett formed a non profit (or a 501C3 or whatever or even a for profit) with a predetermined life of 364 days. We do this to avoid making a permanent bureaucracy. Next year if the market conditions have changed its life is simply not extended. Next we asked professionals from the city if they would participate in helping this entity make the city some money. We ask a local attorney, a local mortgage broker, a local real estate agent, etc to help make this work. Given the amount of free publicity this would generate I think we would have to fight them to keep them out. Next we say that a certain percentage of the profit would go to those volunteers at the end of the year to compensate for their time. This allows for the locals to drive the best bargains and make the city the most money. But it would not make them drive the hardest bargains because in the end it is not going to make much more that coffee money.The compensation will be paid for performance and only at the end of the year. But I am a firm believer in the profit motivation.
Now if the corporation we form had to be a profit making corp. because of whatever rules there are so what. We make it a redevelopment corporation and have the city make redevelopment loans to it based on payback. Because of the way this works we cycle thru money and the faster we find the city good deals the more money we make the city.
Now the pros we hire for this can do the old banking wholesale bit. Your real estate guy finds values, your mortgage broker processes the loans, an investment banker places the MBS (Mortgage Backed Security) with FHA, FANNIE MAE, etc. We could even advertise for possible deals. Finding the right deal will again not be hard because of this market. Again there are plenty of homes for sale in Everett that will qualify. Considering the above deal here is what you have. A simple new mortgage at an above market interest rate with a correct valuation. This would be easy to sell on the secondary market.
The city could take a few million dollars and make $20,000 to $50,000 per month for itself. Everyone wins. Our city becomes the talk of the nation.
Of course there are wrinkles that would need to be worked out but why worry it would never happen her anyway. Besides the city would never move fast enough to take advantage of the market of homes for sale in Everett. .
Comments are welcome.
Jim Johnson
