Is It Profitable                                      ...

For the top management of most major corporations, making a profit is their primary and often their only concern.   But it doesn't have to be that way.   It's possible and relatively simple to create a home loan system with much broader concerns -- concerns which include the corporation's employees, it's management, its customers, the environment, and profits.  

One must keep in mind the fact that without major changes in the financial industry's present business model, failure is inevitable.  The existing system is simply not sustainable. 

A viable, workable,  easy-to-implement, alternative solution is to create a new organization for the public service portion of the lending business.   Funding for major corporate projects, where loans are measured in multi-millions of dollars, would remain with the existing banking institutions.   Individuals could still go the banks for loans, however, they would now have an alternative to the existing system. 

1)   For the public service sector, utilize some of the existing procedures, infrastructures, and people in the present  lending business and create a completely new financial infrastructure focused on creating and managing loans for small businesses, home owners, students, auto buyers and the like.  This process is described in the next section, below.

2)   For the lending to major corporations for multi-million-dollar  projects, there are two options.    

**    Update the way existing  financial corporations are managed by applying  The New Corporate World Foundation's Win-Win Business Structure.    

**    For corporations that choose not to participate in the new business structure, they simply maintain their existing structure and be subject to federal regulations.  

The proposals suggested below, when implemented, will end the home foreclosure crisis in a matter of a few months.   

Don't Just Fix -- Also Create:   Obviously we cannot allow existing financial organizations to collapse and cease to be.   At the same time, neither can we simply throw money at them and think that they'll solve the problems, themselves.    As a middle ground, suppose we keep the existing financial structures from collapsing completely while we examine our options and find the best ways to accomplish our financial goals.   

Can we get real for a moment?  It's not possible to buy up enough bad loans from  the banking industry to get them solvent again.   And even if that were possible and actually done, you'd still have a financial system that is obsolete, fundamentally flawed, dysfunctional, grossly unfair, filled with ethically questionable loan practices, riddled with conflicts of interest, and managed by multi-millionaires who don't care about the people, their plight or the environment.

It's much simpler and far less expensive, and morally sound to have some other entities do the lending to home owners.   By separating personal and small business lending from corporate, big-business lending, and by handling personal and small business lending by way of a nationwide network of non-profit foundations, the home foreclosure crisis can be ended in less than six months.   This process will also provide substantial moneys to fund county and city governments.

Our intention here is to focus on one piece of the huge, financial network.  That focus is on  the public-service portion of the lending business -- the portion of the industry that involves individuals borrowing money, such as small business loans, home loans, education loans, auto loans, and the like.    The management of the existing system has to be either redesigned or replaced.  The replacement possibility is outlined below.   The redesign possibility is detailed  in the  section titled:  Creating a Solid Financial Foundation for Corporate Employees ² 

The New Lending Structure      ...

The New Lending Structure:   The government declares a suspension of all home foreclosures until the new system (described below)  is in place and functioning.

A network of independent,  non-profit foundations is set up with a foundation in every county in the entire country and with multiple foundations in counties with large populations.   Each foundations is the property of the people of the county in which it is located.   Overseeing of the foundation is done by an independent board elected directly by the residents of the county.   The foundations are intentionally built outside of the existing political structures to avoid the political infighting and to avoid the big-money special interests that dominate so much of  present-day politics.  

The foundations are designed to loan money to local  home owners, to small businesses and to individuals.   Start up money for the foundations will come directly from the federal treasury (and not through the Federal Reserve).   The Foundations will provide fair-priced, simple-interest, fixed-interest loans to the people and small businesses that it serves.   The foundations will  start by servicing home owners facing foreclosure.   Once the foundations are established and functioning, they will brining in substantial amounts of money that can be used to fund county and local governments.

Why Use a Non-profit Foundation Format?  Because this will create income-producing financial  structures that belongs to the people of each county and not to the traditional, financial organizations which are owned mostly by the super-wealthy, and dominated by the big-money interests.   

With a profit-oriented corporation, money is constantly being siphoned out of the business to pay lenders (stockholders).   With a Non-profit Foundation, all the money stays in the foundation and is directed to its beneficiaries. **ncw3    

What Will These Foundations Do?  Their job will be to  service the residents in their county.   The foundations will  become the primary lenders for small businesses and for individuals.   Most home loans,  auto purchases, student loans, and the like will be funded out of these foundations.   The existing banking system will continue to  fund corporate loans and other privately owned projects in need of large amount of money.   

Each county Home Loan Foundation will be part of a National Association of Home Loan Foundations.   The association will not have power over the individual foundations.   Each foundation will belong to the people of the county that it serves.   According to the U.S. Census Bureau, there are 3,141 counties or county-equivalent administrative units in the United States.   

Why have so many independent Foundations?   The first reason is to empower local communities.   The second reason is to prevent large concentrations of power.   A National Association of Home Loan Foundations  will represent the foundations when negotiating with major corporations and with state and federal governments.  It will share ideas and options with the member foundations.   The intent is:  1) to spread the power base, 2)  to have significant transparency,  and 3)  to have outside audits so that fraud and the misuse of funds is prevented.  

The foundation system puts the decision making on a semi-local level.  It's neighbors taking care of themselves and each other.   The foundation administrators are people who know and understand the local level needs and desires.   There are thousands of out of work people with the skills necessary to manage the borrowing and lending aspects of these foundations.   

The Source of Funding:   The experts are telling us that in order to solve the overall financial crisis, the home foreclosure crisis is the underlying problem, and that it must be solved first.   In this solution, Congress will fund the creation  of a Lending Foundations  in each county in the entire United States.   The  federal government will fund these foundations directly out of the United States Treasury and each foundation will deal with the foreclosures in its own county.   The remainder of the November 2008, 700 billion dollars bailout money could fund the solution to the home foreclosure crisis.   

Loan based on Home Value:   Each foundation will examine the financial circumstances of the home owners facing foreclosure in their county using the  procedures common to the home loan industry.   The foundations will bring in  independent appraisers to assist in determining the value of each property.   The Foundations will negotiate with the present lenders.   The foundation, the lender, and an independent appraiser, examine the property and the circumstances and determine a fair and reasonable amount to pay the present lender.   

Lenders will be given foreclosure value for the home plus a bonus for cooperating with the foundation.  The present lender is  paid the agreed upon amount of money to complete and close the present loan using money provided to the foundation by the federal government.   Note that in this process, the public and the lending institutions share in absorbing the loses created by the inflated home values.

Borrowers who have the ability to make the payments will be offered a new loan. **hf5  For borrowers  who do not qualify for a new loan, the foreclosure procedures will utilize the new and unique foreclosure process described on the page titled:  A New Way to Process Home Foreclosures.   The foreclosure procedures will be handled by the county and not by the former lender.

A new mortgage contract will be entered into based on the home's value ten years ago.   Why ten years ago?  Because of all the manipulation of the financial system, present home values are significantly inflated.   If loans were to be made based on the inflated values, when the home values finally level off at fair market value, the home owner would be owing more money than the property is worth.    

Local Management:   Each Foundation will maintain and manage it's own loans and whenever necessary, be in direct contact with the borrower.   The foundation bylaws will specify that the loans cannot be sold to investors or otherwise moved out of the foundation's direct control.

Funding the Foundations:   With Congressional authority, the federal government will fund the foundations directly from the U.S. Treasury without going through the Federal Reserve.   Why fund directly from the federal Treasury?  Because this will eliminate incurring any debt, the U.S. Treasury will provide the money to the foundations at zero percent interest.  The foundations will charge a nominal interest rate the homeowners, perhaps a fixed, simple interest loan at three or four percent per year.   

Funding County and City Governments:   In addition to returning the borrowed money to the federal treasury, the profits from the home loans will be directed to creating local infrastructures and/or to pay for local social services, and/or to cover county and local government expenses, and/or pay for local education.   This will give county and local governments an income stream that will not depend upon taxes, fines,  or user fees.   This source of money will reduce the need for and could drastically reduce or even eliminate property taxes.   (We might even get rid of parking meters in the process.   We could even stop using the police as roving tax collectors.)

Inflation:   Because the fiat money created by the government would be being used to create goods and services valuable to the community, (as distinct from creating bombs and other short-life tools of war and killing) this would easily counterbalance the money being added to the money system and it's impact on inflation would very likely be none or negligible.   When the foundations returned the original funding moneys back to the federal government, this would have a deflational effect, and therefore,  in terms of inflation, the long-term, net effect would be zero.   

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