Jim Ley's Proposal

Today  I received a very good question from a local businessman.   Here it is
with my reply.  There was a story about this in today's Sarasota Herald
Tribune which you can read here.
_http://www.heraldtribune.com/article/20081023/ARTICLE/810230383/2055_
(http://www.heraldtribune.com/article/20081023/ARTICLE/810230383/2055)


In a message dated 10/23/2008 12:36:35 P.M. Eastern Daylight Time,
_jeff**********@******.com_ (mailto:jeff**********@******.com)  writes:

Mr. Miller, Ms. Mason & Mr.  Mullarkey,
I have a  choice to make in the upcoming election regarding the best
candidate to fill the  seat for County  Commissioner – District 1.  
A deciding  factor for me may be the candidate’s stand on Jim Ley’s recent
proposal to help  Sarasota  County residents avoid  foreclosure as reported
today in the Sarasota Herald  Tribune.
I would like  to know your thoughts on this proposal. 


Hello Jeff,

   A good question and a tough one.  First a  little basis for my decision. 
I do not favor the Fed bailout  program.  It is telling the big financial's
that you can make stupid  mistakes and there will be no economic consequences
and it is getting very close  to socialism/nationalization of private
institutions.  Just look at the  mess with Fannie and Freddie.  The proper course of
action would have been  to allow Bear Stearns to fail.  If that had happened we
would now know what  all that paper is truly worth.  Be it 10 cents on the
dollar or 70 cents on  the dollar.

   A lot of people who saved money for a 20% down  payment to buy a house,
did full doc mortgages with conventional terms are being  caught up in this
mess.  Those people bought a home, not a house.  I  would be inclined to approve
such a program with a few caveats.

   The home must be owner occupied, full financial  disclosures, conventional mortgage and the home owner must agree to a  second or third place non
tax lien by the county.  As Ms. Patterson said,  the funds should be used for
refinancing not making current payments, this way  the banks still have skin in the
game. If the home is later sold with  a profit greater than the amount of the
mortgage then the county  should be repaid at the closing to satisfy the
lien.  If the home is  sold within 5 years the money becomes due and owing
immediately.   This would motivate the homeowner to maintain the property and compel
him/her to  stay in Sarasota and not just walk away.

   This approach would help the honest people who  might need a little and
protect the county at the same time.  It would not  be free money.  In my talks
with people I detected a common thread,  FEAR.  This fear could lead to
paralysis of our economy.  This is  one of those occasions where a little help, not
a handout, can have a  broad based positive return.  Those being helped will
breathe a little  easier and they will talk to their neighbors in a positive
way as well.  I  hope this answers you question and would greatly appreciate
any feedback you may  have.

Sincerely,

John Mullarkey