Why we need a bailout

We need a bailout to help the many folks losing their homes today. Kristi Schofield and her husband Paul are losing their New Hampshire colonial on 2.5 acres because they could not afford to keep paying their mortgage. According to the Salem, NH Eagle-Tribune, the Schofields enjoyed a six-figure income, bought a home that was apparently 3 times the median house price in New Hampshire at the time, and they have lost their home to foreclosure.

If the upper middle class is losing their homes, things have gone too far. Hillary's right - we need a bailout.

I propose that we help homebuyers and homeowners. I have a specific plan for helping these folks.

1) Lower taxes. Even Warren Buffet says he pays less in taxes, proportionally, than his employees. Eliminate the AMT. Taxes have become much too large a percent of GDP, and it's time governments share in the pain by learning to live on a frugal budget.

2) Increase education. If it comes down to cutting a history class from high school graduation requirements, fine, but Americans need some financial and life skills that they are generally not learning at home. When we have college graduates earning six-figure incomes that can't figure out that they cannot afford their home anymore - a home they bought 8 years ago, before the most unprecedented real estate appreciation in recent history - you have to admit that we have failed our education responsibilities.

Teach high school students about the importance of reading legal documents, teach them how to find legal help if they don't understand a contract, teach them about how compound interest works - on loans AND savings, teach them about renting and buying houses, cars, and personal property. Teach them that car salespersons and house salespersons don't have our best interests at heart. Teach them the life skills that we ALL need, that far too many Americans claim they don't have and, therefore, cannot be responsible for the outcomes they create in their own lives.

For people who have already graduated, put a blurb into the IRS forms and pubs reminding them that the government provides pamphlets on every imaginable subject, and telling us where to find those pamphlets, including the Consumer Handbook on Adjustable-Rate Mortgages.

3) Prosecute financial crimes and help the victims of fraudulent brokers through the crime victim assistance funds that are already available.

4) Fix predatory loan servicing. Predatory servicers sometimes "lose" timely payments, resulting in late fees. In states with poor consumer protections, these servicers can foreclose - with no real valid cause - in a jiffy. This is flat-out wrong, and should have been resolved a long time ago.

5) Eliminate taxes on forgiven debt. Right now, a homeowner whose house is "underwater" - worth less than he owes - faces a tax bill on the "forgiven debt" when the bank forecloses (the difference between what is owed and what the house is worth).

6) DO SOMETHING ABOUT CASH-BACK AT CLOSE AND CASH-OUT-RE-FI-THEN-WALK-AWAY SCAMS. There are fraud rings that specialize in buying homes for the cash-back-at-close and then walking away. Heck, Casey Serin, posterboy of all that was wrong in the housing bubble, used the cash back to live it up and perptrate even more mortgage fraud. THIS STUFF FALSELY INFLATES COMPS, WHICH STEALS MONEY DIRECTLY FROM THE POCKETS OF HONEST HOMEBUYERS.

7) Speaking of comps - REQUIRE MLS REAL ESTATE AGENTS TO DOCUMENT "CONCESSIONS" IN MLS, AND TO PROVIDE CONCESSION INFORMATION WHEN THEY PROVIDE A BUYER OR SELLER WITH COMPS. For non-MLS transactions, have the County Recorders collect that data and make it available in the same manner as they make other property data available.

8) There will be employment fallout from all of this. The AMT tax prohibits taxpayers from taking tax credits for things like energy efficiency improvements. Until the AMT is fixed, allow energy efficiency credits to be taken off the bottom line, without being reduced by AMT. This will increase investment in energy efficiency and create employment.

9) Fix the H1B visa and other guest worker programs. Eliminate loopholes and lack of oversight that are currently being used to strip Americans of their jobs.

For the folks who are losing their homes now, for whom most of these suggestions are too late - prosecute mortgage fraud. Expedite it, and create an expedited system for processing RICO claims against the convicted fraudsters. Have the Federal Citizen Information Center create a handbook on "Recovering from Foreclosure." Put some real privacy laws in place, so not EVERYONE can see your credit history. Raise the limits on 401k and IRA contributions to increase investments - to help foreclosees to rebuild, and to improve confidence in our capital markets.