With slight adjustments, we foresee the Treasury, HUD and FHFA's implementation strategy could realize the same benefit yet at approximately 75 percent less cost spread out over the next 5 years. Plus, there is a way to lower lender risk, eliminate consumer balloon exposure and extend an opportunity for a true economic return versus a good-will spend to the taxpayers
Atlanta, GA (PRWEB) February 22, 2009
Since last summer's collapse of the U.S. residential housing market and up to the recent inauguration of a new administration in D.C., the American public has been awaiting the government to address a problem that has caused a national economic crisis with global effects. As the cliché goes, everything rises and falls with leadership -- whether at a household, community, industry or national level.
"On the surface, this housing recovery and stability plan appears sound and sets the stage for a series of steps in the right direction," Kelly Robinson, CEO of Archie Mae explains, "and once it is fine-tuned and implementation guidance is given then the industry may be in a better position to help another 5 to 6 million homeowners beyond current estimates".
Robinson believes that further congressional legislation that is specific is needed to make the impact everyone is expecting. "After review of the provisions, we would like to see adjustments in the loan-to-value caps, dual loan consolidation, consistent alignment across all agencies as well as creation of an incentive for private label issuers of non-conforming loan securities, e.g. investment banks, foreign investors, etc., enabling them to re-enter the secondary market".
Archie Mae, a pioneer in mortgage innovation, will continue to advise congressional, administration, policy and industry leaders on a comprehensive mortgage product as a core component of the overall fix for the industry. Robinson says, "I believe we are 95% of the way there where an optimized, universal mortgage will be available to those who are not only in distress but those who are first time homebuyers as well as those simply seeking to refinance. The time has come where the standard 30-year fixed rate mortgage needs to be upgraded with progressive features such as shared appreciation where affordability can be realized over the long term -- without interest rate sensitivity".
Using the $75 billion dollar appropriation, Archie Mae believes the Stability Plan estimate of impacting 9 million families could be expanded. Rhenardo Worrell, Chief Product Officer says, "With slight adjustments, we foresee the Treasury, HUD and FHFA's implementation strategy could realize the same benefit yet at approximately 75 percent less cost spread out over the next 5 years. Plus, there is a way to lower lender risk, eliminate consumer balloon exposure and extend an opportunity for a true economic return versus a good-will spend to the taxpayers". He went on to say that "by adopting the last recommendations embodied in The Bridge (SM) program which includes a 60 month financial literacy program, the government could help families realize a lower debt to income ratio and about $406 per month in savings based upon current medium home price which positions our economy to benefit from roughly $43.6 billion in disposable income annually".
Based upon extensive study, Archie Mae, a 7-year-old, Atlanta-based developer of financial products and educational services who ironically was founded amidst crisis on Tuesday, September 11, 2001, determined the problem was not solely ineffective standards per se as a direct cause of the problem because underwriting was simply a magnifier of a deeper issue -- product design. Originally, interest-only, negative amortization, as well as option ARM loans were offered as wealth management tools. In essence, these mortgage products were designed correctly for users who could sufficiently handle the short balloon triggers associated with rate or term changes.