Mortgage Resets

Similar to the proposals being floated in Iceland, reset all mortgages to 70% of current property values. This would likely have to be mandated by the government and the government would have to change the tax law so that people aren't taxed based on cancellation of debt for which they would have no real cash to pay the tax. This would get consumers spending again, eliminate the tremendous costs associated with foreclosures and increase homeownership.

Why would the banks go for this? First of all, they already have effectively written off this bad debt any way. The amount of money they are going to get from this loan through a foreclosure or short sale is actually going to be less after factoring in legal fees, etc. Lastly, the banks would see a huge increase in new loan and refinancing business.

Also, people would feel wealthier which has proven to spur consumer spending, the real engine of economic growth.

This proposals helps people, the economy and the banks.



  • We should remove fractional reserve banking from society as a whole.

  • Maybe have a co-contribution proposal instead whereby governments will contribute one dollar towards someones mortgage for every one dollar the mortgagee pays off their loan (with a cap when the loan gets back to 50% of the value of the property). This way people have an incentive to keep paying down the loan (and quicker with an end of offer date attached ) rather than be given a freebie. The Australian Government pays a co-contribution of up to $1000 in superannuation (retirement savings) dollar for dollar for low income earners. If you don't put in $1000 yourself you don't get the $1000 bonus. It's done to encourage saving for your retirement. The above would be to encourage paying off debt.
    To stop people drawing down the balance again the bank (who provides the mortgage) should lower the available balance by the amount of the government contribution.

  • I object because this keeps housing prices too high for people to enter the market.

  • I object because more goverment involment

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