Thursday, March 19, 2009

Should Bailed-Out Homeowners Be Required To Pay Restitution?

This makes a huge amount of sense. With all the money being printed, eventually hard assets will have their day again, why shouldn't some or all of the assistance be paid back at some point?

Here is an excerpt:

"Specifically, I propose that bailed-out homeowners, for the rest of their lives, give up 80% of future capital gains from the sale of their homes until the government gift is paid back. They would be required to pay back only 80% of each capital gain to give them an incentive to keep their homes in good shape and sell them at the highest price.

Homeowners currently struggling to keep their homes shouldn't mind giving up 80% of something in the future that they were not expecting to get anyway. Even if they do mind, the repayment wouldn't interfere with their current ability to make the modified mortgage payments and they should neither expect something for nothing nor be given such an offer.

The enhancement I propose is equivalent to the government taking an equity position in the future capital gains in housing for these homeowners."

Scott Dauenhauer CFP, MSFP, AIF