Please review my plan for housing recovery and make suggestions

[louis c]

I've given some thought to a mortgage recovery plan and I think DUers could improve or set me straight on why it won't work. Here goes.

Mortgages that were in the pipeline before September 15, 2008 will qualify. I choose this date because it coincides with the economic meltdown. It will not allow people to "job" the system.

Mortgages of $415,000 will qualify in full, those that are greater can qualify for the first $415,000. I choose this number because it is about the average of outstanding mortgages.

You can qualify, whether or not you are in arrears or in bankruptcy.

Here's the particulars. Your house can be reappraised by a federally approved appraiser. Preferably, a government employee. You can qualify for as much as a 20% right down on the principal of your mortgage, up to the new appraised value. There will be no cash out at closing. So, let's say, for example, that amount is about $80,000. The U.S government will pay that money directly to the bank. The government then will hold a no interest lien for $80,000 against any future transaction. The new loan will be given at a 30 year fixed rate of 5%.

When and if the market rebounds, the owner can refinance or sell after he or she pays off the lien, which will be the first lien holder, even ahead of the bank. Approximate cost $2 trillion, but it should all be paid back, in time. The taxpayers will be out the interest.

What do you think?