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Municipal Foreclosure Relief Authority
Here is how any town, village, city or other municipality in the United States (the "Municipality") with a population under 50,000 can fix the mortgage foreclosure crisis in the Municipality itself, without seeking any statute, funding or approval from the federal or state government or any of their agencies. Instead of being at a cost to the Municipality, the Municipality and its residents and businesses will increase their respective incomes and value.
Although the program could work in areas with larger populations, it seems to me (Carl Person, originator of the Plan) that it is easy to implement in areas below 50,000 because there are fewer elected and appointed politicians to convince (and who also might have no interest in reform because of the profits they're making in doling out government money to their friends), whereas in areas below 50,000 in population you can actually reach everyone in town, through a door-to-door canvass and get their backing. To try to do this in large cities takes too long, too much money, and too much opposition.
Accordingly, I talk about this Plan of mine as if it applies only to Municipalities having a population of less than 50,000.
Here is my Plan, as set forth in my contemporaneous YouTube video # 43 (scripted and produced by me on 11/21/10), entitled "Plan for Towns to Prevent Mortgage Foreclosures and Guarantee Loan Modification Agreements", URL: xxxx.
My name is Carl Person and I have figured out a way to stop foreclosures and loss of homes and want to explain this plan to you – and get you to tell others so we can end this mortgage foreclosure mess.
I graduated from Harvard Law School and I’ve been a lawyer for more than 40 years and recently have been spending most of my time defending foreclosure actions and bringing lawsuits against banks as counterclaims or in wrongful foreclosure actions. I’m licensed to practice law in New York and, with local counsel, I’m able to represent homeowners in the courts of the 49 other states.
Alternative Video Titles To Give You an Idea What This Video Is about
Here are some alternative titles I was considering for the video, which indicate various aspects of my Plan:
- Foreclosure Problem Solved with a Community Mortgage Guarantee Corporation
- Tuition-free College for Residents only Solves Mortgage Foreclosure Problem
- Mortgage-Foreclosure Crisis Can Help Solve Overall Economic Problems for a Town, Village or Community
- Mortgage Relief for Homeowners Can Be Available through Town or Village Action
- A Plan for Towns and Villages to Guarantee a Loan Modification Agreement for Local Homeowners
Summary of Plan for Adoption by Town or Village
My plan, simply put, is to have the town or village in which the homeowner resides step in to a foreclosure or threatened foreclosure and do, or be prepared to do, any of the following:
- monitor the status of local residential mortgages (through communications with the banks, reviewing new liens against the mortgaged properties, and looking at unpaid real estate taxes) to be able to get help to the financially-troubled homeowner on a timely basis
- become a party to any foreclosure and assist the homeowner in avoiding a default
- agree to subordinate unpaid real estate taxes to the mortgage lien, to reduce need for a bank to foreclose
- guarantee payment of a reasonable loan modification agreement, eliminating the bank’s argument that the homeowner has insufficient income to pay the reduced monthly payment of a loan modification agreement
- purchase the property at an auction foreclosure sale (if matters should go that far) and rent the property to the former homeowner with an option to purchase (and recover any equity in the property for a set period of time)
- float a triple-tax exempt municipal bond issue to provide the money needed to prevent local residential real estate from being foreclosed and sold, which would have harmful effects on land values and tax revenues, to name two obvious things
- go into court (hopefully, through the Munipalities "Town Attorney General") to enforce the homeowner (and now the Municipality’s) right to have the bank negotiate a loan modification agreement in good faith; this could be done before any foreclosure action has been commenced or sale has been threatened, or after a foreclosure action has been commenced (in the 23 judicial foreclosure states)
Part of a Larger Plan to Create Prosperity for a Town or Village
I have figured out – through 4 specific reforms - how a Municipality can create prosperity for its residents and small businesses. This foreclosure plan could be added as a fifth reform. The four reforms are:
- A town attorney general to protect the rights of residents and small businesses at government expense, and to bring actions against corporations which have injured the Municipality or its residents or small businesses, with substantial monetary recoveries being anticipated for the town, sufficient to pay for a tuition-free equivalency college and to fund this foreclosure relief plan
- A tuition-free equivalency college for residents only – which would drive residential land values up at least 20%, by enabling residents to save perhaps $20,000 per year (per child in college) on college expenses – this means the Municipality’s (or town's) involvement in keeping residents in their homes would be done at little or no risk to the town. The town is an insider as to the local real estate and can assume bank service functions of working out a troubled mortgage that monetizing banks, hedge funds and vulture funds no longer provide
- An Area-Wide Payroll Administrator, to make it easy for self employed persons and small businesses, as well as households to hire and fire employees, with the burdens of regulatory compliance as to payroll reporting requirements shifted to the Area-Wide Payroll Administrator; this immediately would create new jobs in the area because it would make hiring and firing easier for self employed persons and small businesses
- Finally, the residents and small businesses in the town or village would have a new market for obtaining employment and income, a task marketplace, using key word ads such as “Tutor Quantum Mechanics – High School Level - $30/hour” or “Task Consultant – to Define Your Tasks and Create Landing Pages for Your KeyWord ads” – Also, the task marketplace would enable anyone to offer goods in addition to services. It has a 50-mile ZIP-Code radius search to enable your ads to be found by local purchasers
If these 4 reforms take place in a town or village, and they require no federal or state money, grants, statutes or approvals, the town and its residents and small businesses will prosper, and the real property values will go up because of an increased demand for persons to live in the town. The increased land values will ensure that the town will be able to give financial assistance to troubled homeowners because the land values are being increased by other local activities. [I might note at this point that in 2005, at the request of a publication for the Mayors of New Jersey, I wrote an article (published for the NJ Mayors) entitled "Untapped Revenue Sources for New Jersey Towns and Villages". Later, I spoke to several NJ mayors who said they were reluctant to do what I suggested because it would cause families to want to move into their town. They apparently were concerned that the demand to be caused by my suggestions, if implemented, would have increased land values. Perhaps this is what they need at this time.]
Standards or Conditions Need to Be Developed
Certain conditions could and should be considered by the town or village, such as:
- The principal amount of the loan, as modified, does not exceed 10% of the current appraised value of the property
- The homeowner must contribute at least 60% of the monthly payment under the loan modification agreement - I'm just throwing this number out for consideration but not actually making a recommendation that this number be used; and the same is true for the 10% above
- The Town or village gets a second mortgage to protect its interest (and might have to buy out any 2nd mortgage to do this); with home equity lines it is even more difficult
- The interest to be charged by the town or village for the use of town/village money would be its current cost of borrowing (which with use of tax exempt municipal bonds could be as low as 4.3% to 4.6%)
- Determine to what extent and under what conditions the town or village should exercise any right of the homeowner (through “equity of redemption” or otherwise) to buy back the property or note and mortgage from the bank – or even to purchase the interest before there is a default
Here are some of the benefits in adopting my plan, in addition to the obvious most imortant benefit of keeping homeowners in their homes and stopping the foreclosures and foreclosure auctions:
- Keeps property values up by keeping the potential foreclosed properties off of the market and avoiding distress sales
- Prevents block blight and vandalism occurring when foreclosed homes become vacant, which quickly reduces the value of the other homes in the area and could cause them to go into foreclosure as well (as homes under water and no longer worth saving by paying the inflated mortgage payments
- This plan is an added incentive for families to seek to purchase property in the town/village, which increases land values for all in the area
- Increases the overall real property taxes for the town/village and lessen applications for reduction of the real estate tax
- Saves town/village costs of dealing with the homeless and the social problems of broken homes and impoverished families
- Town can finance this Plan with proceeds of lawsuits commenced by the Town Attorney General
- Provides secured financial support for homeowners to start off on the road to self employment
- At a certain point in the protection process, the homeowners could become renters, but stay in their homes even after they lose the ownership of their home (which could well occur as to some of the homeowners) – the Plan needs to have homeowners trying to solve the problem also in a joint effort with the town/village
- They would be given time to sell the property to obtain any eq-uity or increase in equity in the property occurring over this longer period
Some Random Thoughts:
If the state Constitution or a state statute prohibits a town from guaranteeing an individual’s note and mortgage, a corporation could be created for this purpose, which could raise sufficient money for the project by sale of tax exempt bonds. The town could call this corporation a community mortgage guarantee corporation or a "Municipal Foreclosure Relief Authority".
The town of village, as a first step to slow down foreclosures, could give a credit for unpaid real estate taxes (reserving the right to receive payment later) to avoid buildup of a lien for unpaid real estate taxes. This would reduce the need or desire for a bank to foreclose.
Ironically, we have a Wall Street solution (municipal bond issue) for a problem created by Wall Street.
Why have are governments and elected officials been unable to figure out this solution for themselves? The Answer, I think, is that the solution doesn’t call for the corrupt giving away of your tax money to the banks, the rich, or other favored recipients of taxpayer money. The Federal government is not interested in a real solution to the foreclosure problem because it would not give it an opportunity to give away vast sums of taxpayer money to the banks, hedge funds, vulture funds and hard-money lenders. THis is the most obvious answer. The cure is so obvious, and even when it becomes known (hopefully through your circulation of the idea to your friends and associates, and directly to your town officials), the federal and state governments will do nothing. You can expect this as much as you can expect death and taxes. Federal and state governments don't solve problems. Instead, they spend your money in opposition to your interests.
The town, as a knowledgeable insider as to local real property, is similar to a coop board which buys back coop units or to a single bank which is active in financing the coop units in a single building – They can deal with these transactions more efficiently than others who know less about the property.
What I’m proposing would eliminate the banks’ alleged reason for denying loan modification agreements, and enable these needed agreements to be given more freely, to enable homeowners to avoid getting thrown out of their homes.
The town or village logically and properly substitutes itself to perform the bank’s function of working with borrowers having problems (that we see in the classic film “It’s a Wonderful Life”). The greedy, monetizing banks no longer perform this vital function for homeowners. Instead, they have been selling the note and mortgage as soon as it was created, and turning your note and mortgage over to a non-bank, which or who has no interest in working with you to save your home, but instead has the interest of throwing you out into the street and selling your home for a huge profit, often subsidized by a federal grant of $50,000 to $300,000, just to make sure that you get thrown out. There is no plan for letting you buy the home at the low price at which the federal plan is allowing the vultures to buy your note and mortgage. We need to let the town and village step in to ameliorate this problem.
I believe the Plan works best in towns, villages, cities and other municipalities having a population under 50,000. This is an arbitrary number. Large numbers of people and their political leaders are more difficult to educate about the Plan than a small number, at least this is what I have concluded. I could be wrong, but I want to try my plan first where I think it has more of a chance to succeed. So, if you want to try to save home ownership in your Municipality, here is how to do it, and you should give me a call.
Future Prospects for the Town and Its Municipal Foreclosure Relief Authority
After thinking I was finished with this Plan, I got to thinking about future possibilities for the Town and its Municipality Foreclosure Relief Authority (the "Authority"). I became excited, because I saw that the Authority could enter into agreements with major lenders hold off foreclosures to enable the Town to create prosperity (through the reforms I suggest) and increase the property values for the banks and give them the incentive to hold off foreclosures. The Town is in a better position to do this because an individual homeowner-mortgagor has little money and little credibility with the bank as to increasing land values, but the Town with this Plan, its tax base, and its Town Attorney General has the credibility to encourage the banks to enter into such an arrangement in lieu of facing various lawsuits brought by the town on behalf of its resident homeowners. The is merely looking ahead to where this Plan could go.
I Need Your Help
My plan is an obvious plan, once you accept the idea that the town or village should get involved. The plan will cure the foreclosure problem for a community, and now you have the power to cure the foreclosure problem by giving this video a thumbs up and going to Facebook, Twitter and other social network and blogging websites to tell your friends and associates about this video and encourage them to view it and get others to do the same – to make this solution VIRAL. [This is what I told viewers in my video, and I want you, in reading this hard copy of my video, to do the same. We need to get homeowners to find out that there is a solution to the foreclosure mess. We have to do something ourselves, because there is little interest or motivation on the part of our elected leaders to do anything that doesn't put money into the pockets of their contributors. Your politicians work all day long trying to figure out how to get more money to those that already have too much, who are the ones who now finance political campaigns.
As an aside, I ran for NYS Attorney General in 2010 and did not receive even one cent in contributions. My Republican and Democratic opponents received many millions of dollars; the press failed to mention my candidacy, so that voters never got to learn that there are things that can be done to help them. But, you probably know all that by now. Hope and change has sputtered into No Hope and No Change, other than for the worse.
If you have any questions, please give me a call, at 212-307-4444 or go to my my main website -- carlperson.com and carlperson4NYAG.com -- I am available to help any community implement this plan for its residents, or to talk further about the Plan.