Okay, this is my idea. It came to me the other night as I lie awake mentally tossing around all my deals and wondering how many of them might actually make it to the finish line (i.e. the Closing Table). Thinking as an Investor/Developer, I pondered this: Find a way to buy, construct then market a neighborhood project with an across the board price point that hovers precisely at the Conforming/Jumbo loan rate cutoff--in other words every Unit in this community would have a cost basis price of $417,000 out, or rather, 'in the door'--plus... whatever down payment the Lender requires. They can fight amongst themselves for that business. Also, all the 2nd Mortgage people who don't want to lend money anymore wouldn't have a thing to worry about because they aren't invited to this party.
Price increases can only occur if the Conforming Rate moves up. Want to offer less? The answer is NO. Want to offer more? That ultimate number would be between the Buyer and the Lender. In other words, the cost of a house in my utopian 'hood would be whatever the Conforming rate currently is plus whatever Down Payment the Buyer can negotiate with the Bank on his/her own. This amount would then be placed in Escrow in a different financial vehicle; something with both upside and guarantees, like an Annuity, or stock in Google, to be determined of course, at a later date when and if this economic flying machine ever got off the ground.
The Listing Realtor would get paid on the $417,000, The Builder would take his profit out of the $417,000. The initial Acquisition Cost of the Land would come out of the $417,000. Hard costs and bank fees charged to the Builder would come out of the $417,000. All future capital improvements would be 100% tax decuctible and thus, not added on the Price. There are no Appraisers in this near perfect model because the bank pre-appraised everything before the project began. Foreclosures would occur only because a particular Buyer no longer had the financial ability to make the payments on the loan, not because the Unit lost value and simply walking away seemed like the best idea. Oh yeah, want to sell? Fine. The Price is $417,000. The Seller's profit comes out of the side investment. They can also keep any paydown of the original (and only) loan; again, that would be the $417,000. The Bank makes its money on the Origination Fees, Ammortization/Interest /Yield etc...)
If Foreclosure is indeed unavoidable, the Bank would simply keep the Down Payment Escrow and put the Defaulted Property back on the market for....
Guess...
That's right; $417,000. Oh yeah, plus whatever Down Payment they negotiated with the new Buyer. There would be no Short Sales. Short Sales would be declared an Act of Terrorism and that would be left up to Jenna Bush, by this time the 46th or so President, to decide in the year 2024 or thereabouts, when something like this might make better sense.
Either that....
or...
Another idea of mine called Size 6. It would be a Woman's Store that only sold Size 6 shoes, dresses, bathing suits, etc., regardless of the height and weight of the female customer or how huge her feet are or the actual amount of material needed to construct such individual couture or footwear. The label would simply say... 'Size 6.' The Sign above the store door would say 'Size 6.' All Media advertising would declare...Size 6 is the new Size 14! Again, this would be all be subject to the approval and veto authority of Ms. Bush and whatever she decides is best for the country; she, and of course, Oprah.
I really do need to get some sleep...or something better Close soon, one.
Price increases can only occur if the Conforming Rate moves up. Want to offer less? The answer is NO. Want to offer more? That ultimate number would be between the Buyer and the Lender. In other words, the cost of a house in my utopian 'hood would be whatever the Conforming rate currently is plus whatever Down Payment the Buyer can negotiate with the Bank on his/her own. This amount would then be placed in Escrow in a different financial vehicle; something with both upside and guarantees, like an Annuity, or stock in Google, to be determined of course, at a later date when and if this economic flying machine ever got off the ground.
The Listing Realtor would get paid on the $417,000, The Builder would take his profit out of the $417,000. The initial Acquisition Cost of the Land would come out of the $417,000. Hard costs and bank fees charged to the Builder would come out of the $417,000. All future capital improvements would be 100% tax decuctible and thus, not added on the Price. There are no Appraisers in this near perfect model because the bank pre-appraised everything before the project began. Foreclosures would occur only because a particular Buyer no longer had the financial ability to make the payments on the loan, not because the Unit lost value and simply walking away seemed like the best idea. Oh yeah, want to sell? Fine. The Price is $417,000. The Seller's profit comes out of the side investment. They can also keep any paydown of the original (and only) loan; again, that would be the $417,000. The Bank makes its money on the Origination Fees, Ammortization/Interest /Yield etc...)
If Foreclosure is indeed unavoidable, the Bank would simply keep the Down Payment Escrow and put the Defaulted Property back on the market for....
Guess...
That's right; $417,000. Oh yeah, plus whatever Down Payment they negotiated with the new Buyer. There would be no Short Sales. Short Sales would be declared an Act of Terrorism and that would be left up to Jenna Bush, by this time the 46th or so President, to decide in the year 2024 or thereabouts, when something like this might make better sense.
Either that....
or...
Another idea of mine called Size 6. It would be a Woman's Store that only sold Size 6 shoes, dresses, bathing suits, etc., regardless of the height and weight of the female customer or how huge her feet are or the actual amount of material needed to construct such individual couture or footwear. The label would simply say... 'Size 6.' The Sign above the store door would say 'Size 6.' All Media advertising would declare...Size 6 is the new Size 14! Again, this would be all be subject to the approval and veto authority of Ms. Bush and whatever she decides is best for the country; she, and of course, Oprah.
I really do need to get some sleep...or something better Close soon, one.
LOL,
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