Dear (Lawmaker),

I am outraged that my government passed the Emergency Stabilization Act of 2008 that bails out Wall Street, places the tax burden onto my shoulders, but most importantly DOES NOT SOLVE THE PROBLEM.

The Save The American Dream plan is a far better solution that - by addressing the root of the crisis - will save Main Street, Wall Street, and the U.S. housing market without laying a huge financial burden on me, the taxpayer.

The Save The American Dream plan calls for the Congress to pass legislation that provides for a new FHA mortgage program, the 203S, or the 203 Save program. The 203S program would be limited to homeowners currently facing foreclosure or homeowners who are facing a payment increase they just can’t afford. A 203S loan would have no statutory cap so every homeowner is eligible if the home is owner occupied, regardless of loan amount. With a 203S loan:

• The LTV would be a max of 100% of the current appraised value;
• There would be no credit check qualifying, but the homeowner would need to supply income documentation that showed they could afford the new monthly payments within the existing FHA guidelines;
• All loans would be fixed-rate mortgages;
• The homeowners would have the ability to buy down the rate so the greatest possible number of applicants can qualify;
• Borrowers would agree not to sell the property for at least 5 years; and
• The difference between what is currently owed, plus any costs of obtaining the 203S loan, and the current appraised value of the property (the deficit amount) would be lent to the homeowner by the U.S. Treasury at a nominal interest rate as a second mortgage with no payments due. The Treasury would place a tax lien on the property for principal and interest that must be paid back to the Treasury when the home is sold or refinanced in the future.

All 203S loans would be sold as Ginnie Mae securities just like many FHA loans are now and would carry the current guarantee by the U.S. Government.

The loans made by the Treasury would come from a new bailout plan and would be paid back eventually since the Treasury would be holding a tax lien on the property.

The final price tag would only be the sum of the deficit amounts lent by the Treasury which would only be a fraction of the Emergency Stabilization Act of 2008, since that plan calls for the government to buy in essence the whole loan and not just the deficit amount. Assuming that home values fell by 20%, the total cost would only be $140 billion. The American taxpayer would get a return in the form of interest once the tax lien is paid off.

Since homeowners who elect this plan would be agreeing not to sell for 5 years, the real estate market would instantly see a suspension in the widening of the gap between housing supply and demand. In fact, the ratio between housing supply and demand would vastly improve and ultimately level out as new borrowers get off the fence and enter the marketplace. Home prices would also start to level out and then appreciate again.

Additionally, what the Save The American Dream plan would do is create a refinance boom second only to 2003 levels. This refinance boom would ultimately result in a naturally occurring stimulus package as new jobs are created within the housing and financial industries.

Consider the fact that already this year, lenders are on track to repossess over a million homes by the end of 2008*. Nearly 1 in 10 homeowners are now delinquent or in some stage of foreclosure**. Nearly a trillion dollars in refinance business would be added if those homeowners facing foreclosure had a helping hand and a viable refinance option.

Under the Save The American Dream plan, they have both. The 203S loan application process would halt foreclosure proceedings immediately, giving the distressed homeowner the time they need to complete the process.

I believe this is win-win. Homeowners facing foreclosure will have the opportunity to refinance at terms they are comfortable with and the housing industry will not only be saved, but will prosper.

I strongly urge you to review this plan and pass legislation that will rescue us all from this nightmare and Save The American Dream.

Sincerely,
(Taxpayer name)