"America's Economic Stimulus & Recovery Plan"

For Consideration Of Our Nation's Citizens

America is currently facing unprecedented financial & economic challenges that, if not seriously & wisely addressed now, will have a profound negative economic impact on all Americans, plunging our nation and the rest of the world's economy into a long and deep depression. We should not view a prudent economic stimulus and recovery or rescue plan in a negative, cynical light, as a "bailout." Instead the plan should be viewed in a positive, practical manner, because it is a plan that will restore financial and economic confidence and stability immediately.

The following nine proposals should be adopted:

1. A One-Year Mortgage Holiday. Congress should inmediately re-allocate the approved and appropriated balance of the unspent $787 billion of Economic Stimulus money as well as the balance of TARP money toward this Mortgage Holiday plan. This re-allocation will actually work to jumpstart the economy, create millions of new jobs and stimulate economic growth. Congress should declare a national mortgage holiday for one year. During such year there would be a moratorium on the monthly or other periodic mortgage payments on all residential, commercial, industrial and farm loans. All foreclosures would stop. The Government would pay to the lender an estimated, average interest-only monthly payment (not to exceed 6%). Then, after the one-year "Time Out," the regular monthly mortgage payments would resume as normal with the original mortgage term simply being one year longer. So a 25-year mortgage simply becomes a 26-year mortgage. No balloon payments would be due until a year after the end of the moratorium. Borrowers who do not need relief could elect to opt out. This one-year "Time Out" from mortgage payments will instantly empower millions of American families and businesses to divert their monthly mortgage payment money directly into their own personal & business pockets to save, invest, spend or reduce other personal and business debt, as well as paying down or off credit card debt.

If a borrower owning rental property participated in the moratorium for the mortgage on rental property, the tenants would get one year of 25% to 50% reduction in monthly renters' relief, to be negotiated between individual owners and renters, on a specially designed renters' relief program, so that up to 50% of the relief the property owner receives would be passed through to the tenants of the property. Retail and office tenants could also participate in 25% to 50% monthly rent relief, to be negotiated between individual landlords and tenants, if their landlords choose to opt in to the One-Year Mortgage Holiday Plan. Renters of residential, retail and office space whose landlords choose not to participate in the One-Year Mortgage Holiday Plan will, in any event, receive from the Federal Government at least a guaranteed minimum 38% monthly rebate of their base rent during the Mortgage Holiday time period.

Assuming there is an estimated current $12 trillion of total mortgage real estate debt in the nation, with approximately 80% representing residential debt and the remaining 20% made up of farms and commercial debt, applying a 6% annual interest rate would equal approximately $720 billion ($12 trillion x 6% = $720 billion / 12 = $60 billion monthly) of Government taxpayer expense to reimburse all mortgage lenders the interest portion of mortgage debt for one year. However, it is likely many borrowers who do not need relief would elect not to participate.

If American families' and businesses' regular monthly mortgage payments (rough guesstimate of $100 billion monthly) are infused directly back into the economy, there would be a huge economic stimulus for the country. WOW, now that's real, positive job-creating stimulus, to jump start America's economy quickly!

A new Government commercial mortgage-backed security (GCMBS) loan program should also be made available. This GCMBS loan program would unfreeze the current commercial credit markets to make affordable refinancing easily available for all the existing retail, office, restaurant, industrial, hotel, farm, apartment and miscellaneous commercial real estate loans coming due or that wish to refinance early. The Federal Government would guarantee the GCMBS loans; a portion of the interest paid on such loans would be paid to the Federal Government to offset part of the cost of the guaranty. Such a program is badly needed to make long-term financing available and to bring stability to the commercial financial markets. Its existence and the investment that would follow would help create many new jobs and help preserve millions of existing jobs.

Suggested refinancing (GCMBS) loan terms could be:

30-25-20-15 year terms, fully amortizing loans.

Initial interest rate of 3% for years 1 & 2, 4% for years 3 & 4, 5% for years 5 & 6, and 6% fixed thereafter for the remaining term of the loan with no prepayment penalty.

Basic underwriting loan criteria could be up to 80% Loan to Value - LTV - and a 1.20 Debt Service Coverage Ratio - DSCR.

2. Home Refinance and Loan Modifications. A home loan program should be created to provide all homeowners, especially the majority of those who are current on their monthly mortgage payments, with the ability to refinance their existing home loan. The new loan could be with either their existing lender or a new FHA-guaranteed lender at a lower 4.0% fixed interest rate, 30-year fully amortizing loan, with no prepayment penalty and total refinancing loan fees and all closing and escrow costs not to exceed 2% of the new refinancing loan amount. Those homeowners who are currently in arrears and/or in the middle of any foreclosure proceedings with their current home mortgage debt lenders who wish to remain in their homes and work their way through these challenging times would be offered either a reduced home mortgage debt balance and/or a lower 4.0% fixed rate, 30-year fully amortizing loan with no prepayment penalty and with total loan modification fees and closing and escrow costs not to exceed 2% of the new loan modification amount. BUT the loan modification program that also offers realistic debt reduction relief, besides just a lower 4.0% fixed rate 30-year loan, will also require that the homeowner relinquish 50% of their future home equity to the Government, on a declining scale (1st year 100%, 2nd year 90%, 3rd year 80%, 4th year 70%, 5th year 60%) over the first 5 years and then 50% for the remaining life of the home after the first 5 years, as it applies to the initial mortgagor, but not applicable to subsequent owners. In lieu of the payment of a portion of the home's equity at the time of sale, a homeowner who received debt reduction under this program could pay, either at the time of sale or at the time of refinancing, a sum equal to the amount of the debt relieved plus interest at 6%. Under this loan modification program the taxpayers will most likely be paid back the amount the Government paid out with a profit. Any new home loan refinance and/or modification that provides the homeowner with just a lower 4.0% fixed rate, 30-year fully amortizing, no prepayment penalty loan, but with no debt reduction relief, would not require any Government-shared home equity participation.

3. The Government Should Purchase the Existing Mortgage-Backed Securities. In order to help stabilize and bring liquidity and confidence back to the market and to help "Main Street," not just Wall Street, the Federal Government should purchase the existing mortgage-backed securities, or at least the "toxic" ones where a significant percentage of the loans have defaulted. The Government should provide guarantees so that the banks or another alternative newly established lending source, perhaps through SBA, can start immediately making business and personal consumer loans again to reasonable credit-worthy borrowers to help free up credit and stimulate the economy. These troubled existing mortgage securities will inevitably increase in value as we GROW AND STIMULATE MAIN STREET and our overall U.S. economy. Also, any top executives associated with Wall Street or banking firms that receive any Government-backed securities relief should NOT receive any Golden Parachutes, or excessive salaries or bonuses. We must have total transparency and accountability and also modify the "Mark To Market Accounting Rule."

4. Reduce All Taxes. All taxes, including capital gains tax, should be reduced across the board to stimulate growth, investment and unleash the American entrepreneurial spirit. Any federal tax reduction should include a provision that prevents the states from simply increasing their taxes to eliminate the benefit of a federal tax cut. Waste in all Government programs should be eliminated. In effect there needs to be PRACTICAL ECONOMIC STIMULUS AND FISCAL RESPONSIBILITY!

5. Institute a Real Genuine Energy Independence Program. The Government should implement a new Energy Independence Program that will permit America, without environmental obstacles and delays, to immediately start drilling for oil HERE & NOW in the U.S.A. All areas showing real potential to yield oil, whether off shore or in ANWR, should be opened to exploration, with reasonable but prudent environmental considerations. The country should encourage the development of new refineries, develop more solar, wind, clean coal and tidal alternative renewable energy resources, develop safe new nuclear power plants, more natural gas development to help power industry and develop new fuel efficient, electric, hybrid cars. By developing all of the above ASAP we will create millions of new jobs here in America and become energy independent within 5 years or less, stopping the transfer of billions of U.S. dollars overseas to unfriendly nations and instead reinvest those $100's of billions right here in America. T. Boone Pickens' suggestions are, for the most part, right on target!

6. Adopt Reasonable Reforms & Regulations. Reasonable reforms and regulations should be developed to provide prudent oversight to avoid the mistakes and abuses of the past; but the regulations should permit and even encourage the free enterprise system to thrive, while providing accountability and transparency and real sanctions to those who abuse the system.

7. Invest in a National Public Works Program. Approximately $150 billion should be used for our nation's infrastructure, bridges, roads, water and sewer lines, schools and hospitals and new power transmission lines. These expenditures will create thousands of jobs in every state and be a wise long-term investment in our nation's future.

8. Temporary Suspension for 3 to 6 Months of the Federal Payroll Withholding Tax. In order to increase the average worker's take-home pay by 20% to 25%, and thereby increasing disposable income back into the economy, the Federal Payroll Withholding Tax should be suspended for three to six months. Such a suspension would go hand-in-hand with tax relief to the average worker.

9. Credit Card Interest-Free Holiday. A temporary suspension of all credit card interest for one year to both encourage responsible consumer stimulus spending and also assist all credit card debtors to pay down, reduce and/or pay off entirely their credit card debt. Credit card companies would be paid 6% interest on all the outstanding pre-existing credit card debt at the time and date of the implementation of this One-Year Credit Card Interest-Free Holiday for one year. Cardholders would have a choice as to whether or not they opt into a Special Repayment Program. For those who do opt into the Special Repayment Program, there could be specific requirements, (for example, to encourage possible credit card debt counseling and learning the Dave Ramsey principles of how to get out of debt) to help the cardholders be more responsible with personal finances and to encourage the cardholders and the credit card companies to negotiate in good faith to reach a realistic repayment program:

(a) The cardholders who freely choose to opt in to the Special Repayment Program would agree that during the one-year period of the Credit Card Interest-Free Holiday, they would not accumulate any new credit card debt until all of their existing credit card debt is paid off in full.

(b) While the cardholders are not paying interest for one year, they would be required to pay a minimum monthly payment of 5% of their outstanding credit card balance; and under some special hardship cases, the minimum monthly payment could be less as negotiated and agreed to between the cardholder and the credit card company. Each monthly payment shall be applied first to the oldest ?principal? charges on the credit card, thus reducing on a monthly basis the interest payments required to be made by the Government (WE, the Taxpayers).

(c) As soon as the credit card balance is paid off, any new credit card debt would bear interest at a rate not to exceed 6% per annum on the unpaid balance during the Credit Card Interest-Free Holiday period and not to exceed 9% per annum after the One-Year Credit Card Interest-Free Holiday time period; and, of course, if the cardholder pays the monthly credit card charges in full each month by the due date, no interest will be charged or paid.

Commencing with the implementation of the One-Year Credit Card Interest-Free Holiday, the following credit card fees and limitations would apply for all new credit card debt and for all existing credit card debt of consumers who do not opt into the One-Year Credit Card Interest-Free Holiday Special Repayment Program:

(d) For the one-year period during the Credit Card Interest-Free Holiday, interest on all pre-existing credit card debt shall be paid by the Government to all credit card companies predicated on 6% per annum. Any and all new credit card charges and debt incurred after the date and time of the implementation of this Credit Card Interest-Free Holiday shall be paid by the cardholder and shall be subject to interest at 6% per annum on the unpaid balance during the One-Year Credit Card Interest-Free Holiday. Interest on credit card charges shall not exceed 9% per annum after the expiration of the one-year holiday time period. As is the case now, for those cardholders who pay their monthly credit card charges in full on time, there will be no interest rate charges. The grace period for payment cannot be less than 20 calendar days.

(e) Commencing with the implementation of the One-Year Credit Card Interest-Free Holiday and thereafter, the minimum monthly payment required for all outstanding credit card debt shall be 5 percent of the monthly credit card debt balance.

(f) Credit card companies will be limited to initiation and annual renewal fees in a range between $0 to $125, to allow flexibility for those who have better credit card payment history and credit.

(g) Late payment fees shall not exceed $10 per month.

(h) No new charges of any description could be charged by the credit card company to the consumer for the right to have and maintain a credit card. However, credit card companies could require reasonable credit criteria for issuing credit cards.

The laws governing unlawful debt collection practices should be greatly strengthened and modified to prevent existing and future abuses.

The cost. The Government is already subsidizing most Banks with troubled credit card debt. It is only fair that the Taxpayers expect and demand in return that the obscene interest rates and fees be curtailed, the abusive collection tactics stopped, and consumers get a reasonable break to be able to pay off their credit card debt.

The current estimated outstanding credit card debt in America is approximately $900 billion. Assuming a 6% fixed interest rate that the Government would pay all banks and credit card companies on the pre-existing credit card debt during the One-Year Credit Card Interest-Free Holiday, the cost to Taxpayers would amount to approximately $54 billion for the full year, or $4.5 billion per month. However, the actual cost would likely be much less. Approximately 60% of credit card holders pay their account in full each month; and more than 90% of all cardholders are paying their credit cards as agreed. Most Americans would appreciate this opportunity to get their personal and business credit card debt and financial affairs in order and will wisely utilize this One-Year Credit Card Interest-Free Holiday to dramatically reduce and pay off their credit card debt, thus reducing the credit card debt balance each month so that the total cost to the Government (WE, the Taxpayers) should be less.

Estimated Initial Potential Cost. Approximately $1 trillion, but using the unspent portion of the currently appropriated Stimulus and TARP funds may not require much additional government spending. It is simply a matter of spending the previously allocated Stimulus and TARP money more wisely to help Main Street, all homeowners, renters and small/medium businesses in a way that will stimulate the economy and create jobs. There is no question that is a lot of money; but it will be far less costly in loss to the economy and resulting human misery than doing nothing or continuing on our current path. Most likely the cost will be more than offset and be paid back due to positive economic growth and prosperity.

The alternative is another Great Depression, instigating massive business failures, 15% - 25% unemployment, collapse of the real estate, financial & credit markets with massive bankruptcies. The cost will be much more to our nation's economy and national security than the cost to implement the suggested Stimulus Program.

We are Americans. We live in the greatest country ever known to mankind in the history of the world. We must continue to act and believe that we are indeed "The Land Of The Free And Home of the Brave." Accepting and implementing bold change is what made this country great; and we can and will work our way through these crises as well by rolling up our sleeves and working together as Americans, united, putting our country first for real positive change.

God Bless America!