Obama Letter Sale: A Plan To Fix The Foreclosure Crisis

WASHINGTON -- I am bad at math, even worse at macroeconomics. In other words, I am your standard political reporter. So take this for what it is worth, but I have an idea for how President Obama can solve the nation's never-ending mortgage foreclosure crisis.

He needs to write a lot of letters. Specifically, by my count, 286,572 of them.

I got this idea from the news out of Indiana today: Destiny Mathis, a 26-year-old single mother of three, is thinking of selling a handwritten letter she got from President Obama to get the cash she needs to avoid being evicted from her apartment in Hobart, Ind.

Mathis had written the Obama last winter, expressing concern that she had lost her job, and that she would soon be homeless. The president wrote back, trying to cheer her up. "You have such a positive spirit," he wrote. "Please know that things will get better for you and your family."

Apparently, they didn't, and now Destiny's name has a sadly ironic meaning.

The prospective letter buyer is one of the nation's leading autograph dealers, Gary Zimet. He has purchased eight of these rare specimens -- almost all of the president's letters are typed and signed with an autopen. This one could go for up to $20,000.

Zimet doesn't appear to have a political motive to embarrass the president. It seems that he is just looking to make money. He faced down controversy when he put Schindler's List -- yes, the real list -- up for sale, and he has lots of Founding Fathers stuff, too.

Anyway, here is my idea for the housing crisis: According to government estimates, there are right now about 2.18 million homes in foreclosure. According to government estimates, the average sale price of a foreclosed-upon home nationwide is $168,000.

To get those homes out of foreclosure proceedings -- if they are lucky enough to do be able to do it at all -- homeowners need to fork over three monthly payments immediately. Calculating a 4.75 percent rate on a 30-year-fixed, I come out with a total three-month lump sum payment of $2,629.11.

Multiply that by 2.18 million, and you get a figure for our total national foreclosure-avoidance nut: $5,731,459,800.

But where are we going to get $5.7 BILLION? Why, clearly, from the active left hand of that great scribe, Barack Obama. And now, as Ross Perot used to say, here is the beauty part: He doesn't have to write a letter to EACH of the 2.18 million. By my calculation, he only has to write to 286,572 of them to get the dough.

We'd have to find a way to split the proceeds among all 2.18 million homeowners. This would be a useful task for Fannie and Freddie.

HuffPost intern Sam Haass just came into my office and pointed out that if Obama writes all of those letters, the value of each individual letter would plummet.

And yet, I'm no economist, but isn't flooding the market with pieces of paper precisely what Ben Bernanke and Alan Greenspan have been doing for years? They're not writing letters, just printing dollars.

Comments

[robert horwitz]

08:06 AM on 06/16/2011

Interesting piece Howard and on the face of it one might think this woman's troubles are over except for one thing. A couple of years ago I was doing an Internet search on autographs and letters written by well know people both past and present. Yes, I did look at the selling price of former Presidential Documents. I must say that I was surprised to find out that most of them really don't bring in much money. On the brighter side for this woman with some Real Estate now going for bargain basement prices that is if you happen to have any money at all which most folks don't this individual may win just a little "Piece Of The Future".

[Kai-HK]

01:21 AM on 06/16/2011

Or, Mr. Fineman, we could let the prices of houses rest to their natural market levels and stop trying to prop them up with stimulus gimmicks. We could then ensure that unlucky, the financially imprudent, and the morally and financially bankrupt, be removed from their houses and forced to rent since….wait for it….wait for it….there is nothing wrong renting until you can get back on your feet. And then we can let those financially literate people who have saved, and invested wisely, and worked hard to amass wealth be allowed to come in and purchase those houses at a fair discount. This is a win-win-win situation.

A win for the taxpayer, and its government, who has been propping up the market.

A win for the borrower, who now learns an important lesson about borrowing and the effects of overextending.

A win for those that have lived within their means and have saved and now deserve to be rewarded for their fiscal probity.

Kai

[logicdog]

05:37 PM on 06/18/2011

And a win for the top 5% of the American population who have benefited from tax cuts and financial incentives provided to them by the Congress they bought and paid for, who can afford to buy up all of those foreclosed properties and rent them back to the poor bozos who got ripped off by that same 5%.

You are clearly spouting the plutocrat's creed, which "conicidentally", rhymes with "greed".

[Kai-HK]

11:10 PM on 06/18/2011

Logicdog:

Typical class warrior nonsense. You are so worried about what other people have in their wallet and are making through their savings and investment that you want to ensure that are markets stay crippled.

For people like you, it is always easier to take from someone else than to make it yourself, easier to blame someone else rather than to admit your own mistakes, easier to tax someone else’s success than to realize loss due to your own failure.

For people like you, others people’s money, good fortune, hard work, effort, property, etc. are something you feel entitled to. After all, you have never come across a problem m that isn’t someone else’s fault and can be remedied with someone else’s money.

The only greed are those looking for protection from their own bad life choices. BTW, I am no defender of Bush but a) he cut taxes more for the poor than he did for the rich, b) he created whole new entitlement programs for the poor c) even Clinton cut taxes more for the rich than Bush did. Why don’t you hate Clinton? Finally, so what? He cut taxes for people that made the money. What’s wrong with the government letting people keep more of THEIR money? That should be their main goal these days.

Kai

[Paradise Cigars]

09:36 PM on 06/15/2011

If Obama writes letters 20 hours a day producing 1 letter a minute-
in 100 years he will have helped everyone that is out of work today.

Thank you Obama...

[charleyvldm9]

09:21 PM on 06/15/2011

An easy way is,let the Banks re-appraise all, mortgages bought during 2005 and 2007 (the Bubble period) to today's value,redo the payment books,then bill the Federal govt .for their losses at year's end,the Govt.will take the money from Iraq and Afghanistan war budget which is in excess of 100 Billion dollars yearly.

[John Arca]

06:08 PM on 06/15/2011

LOL a prez promised aren't keep after election day

[bluemirror]

11:54 PM on 06/15/2011

Thanks to the party of "No."

[nosmiley]

02:47 PM on 06/16/2011

Agreed.
Problem is they can't remember anything about their chosen one. It's as if he was never president. As you know. it will take 15-20 years to correct all the damage his administration caused during the 8 years they were incharge. Wish I could develop a selective memory like that. The truth keeps getting in the way.

[Jill1975]

06:06 PM on 06/15/2011

It's hard to feel sorry for a 26 yr old single woman who already has three children and no husband to help in their support.What kind of education does she have that she thought she could take care of three (so far ) children ?

[rebelriser]

05:29 PM on 06/15/2011

All who are yet on the side of our President & Democrats must write letters to the Democrats and President Obama and hope that our President WILL see our opinions or be told of how opinions are going, and I'm certain that MANY letters from us, their maybe still supporters will sway them to our side. If Dems want our continued support, they had better pay more attention to us and step out of line with the Bankers & Wallstreet. Enough letters with demands that this Administration get in line on our side would get their attention especially with next year's elections around the corner.

[Pablo175]

03:11 PM on 06/15/2011

"I am bad at math, even worse at macroeconomics."

So take a course and learn. Math and economics are important.

[Joe Russoniello]

03:07 PM on 06/15/2011

Nice going, Howard. That's about as creative and effective as what the Obama Administration has proposed so far. Don't be surprised if some genius decides to offer "loan principal modification" to those who are defaulting on homes they didn't qualify for, except for the fraud in their applications, so that those who are struggling to meet their payments will be punished and those who cheated will be rewarded. Can't wait!

[rebelriser]

05:34 PM on 06/15/2011

I think we, in large numbers, need to tell Republicans we're strongly against their policies and we'll show them at the polls. They need to see proof, I guess, that the majority are against their weaseling their way into office.

[Jill1975]

05:59 PM on 06/15/2011

Mortgage brokers committed frud by lying about applicants's credit scores so they wouldn't qualify for a prime fixed rate lower interest loan , so that the broker would get a much higher fee and the securitizer would make more money in fees and interest.BNrokers also committed fraud by altering docs to change fixed rate mortgages into ARMs.

[larron]

03:05 PM on 06/15/2011

There really is way to clean up 2.18 million foreclosures. Doing so would bring this recession to a close more rapidly. Housing a powerful economic engine and if we don't get the housing market perking pretty soon, we will loose the whole decade. You see, until we clear out the sea of foreclosures we won't be able to get employment back to pre-recession levels. . So, here is how we get this done: First, we have the President propose a tax cut for buyers of foreclosed properties. That should bring the GOP on board. Then we have Congress pass a bill granting all purchasers of foreclosed homes and condo's a tax credit equal to 1% of the purchase price. We don't care if they buy to live in the home or to use it as an investment property. We also don't care how many homes they buy. What matters is that these properties come off the lenders inventory of REO's That does 2 things. It frees up bank reserves for new lending and it eliminates the low price competition which is keeping developers out of the market. Also, since most foreclosures are in really sad shape, the need to refurbish these properties will generate sales of materials and fixtures and create much work for the building trades. So the President needs only to write one letter, asking the Congress to adopt such a plan. See, how simple it really is when you get beyond all the hype.

[Jill1975]

06:01 PM on 06/15/2011

You want the govt to alter the free market to keep the prices artificially high.

[Union Taxpayer]

11:56 PM on 06/15/2011

Sounds like another bubble. Your missing one big detail though.... Nobody has any artificially inflated home equity to borrow against. They can give all the tax breaks they want but its all in vain when the potential customers have no money to spend.

[Pinchy]

02:30 PM on 06/15/2011

A good 'teachable moment' that was pointed out at the end of the story, which I was about to point out if Mr. Haass hadn't done so. This is a good analogy to the idea of just continuing to print more money to prop up the economy. Eventually it becomes worthless, just like hundreds of thousands of hand written letters from the President would become. A Babe Ruth autograph is worth a lot of money. However, if he had signed as many autographs as Pete Rose or Bob Feller, it would be worth a fraction of what it currently is worth.

[PatLow]

03:14 PM on 06/15/2011

You are on to something. Perhaps if people just burned down the houses they were underwater on it would create a demand issue. Or we could put people to work be demoloshing houses and then building them over at a sustainable rate.

[Union Taxpayer]

11:58 PM on 06/15/2011

I think the article was meant as a joke to go along with all the laughable solutions our elected leaders are trying to sell.

[dean1000]

02:20 PM on 06/15/2011

I'm no economist either but you make a great point Howard. All those dollars that Helicopter Ben and Bubblehead Al printed made all the dollars people had earned worth less. Actually the banks (not the Fed) make dollars worth less by loaning money (credit) they don't have.
The US should have a non profit banking system.
If Greenspan had wanted to do it right, the International Brotherhood of Speculators, Price Gougers, and Economy Crashers would have had the politicians whey own remove him from office in a heartbeat.

[IamGerry]

02:19 PM on 06/15/2011

I've gotten two letters from Obama and the thought of selling them never entered my mind.

When I first heard about this girl's situation, I thought, "Where is her husband?" Oops, no husband, just baby daddy, who took a powder.

Just goes to show you, you reap what you sow. I'm not anti-sex, but some sort of commitment should be there before you enter into a relationship. Or at least birth control, unless you are totally committed and if you are, you are probably married. That saves a lot of problems.

[eeentropyyy]

03:03 PM on 06/15/2011

Not quite sure how marrying someone gets them a job but ok.

[IamGerry]

03:31 PM on 06/15/2011

That's not the idea. A husband in the picture helps in support, both physical and spiritual and hopefully, monetarily as well. It's much easier to raise children with 2 incomes rather than trying to do it on your own.

Besides, she has a new baby with health problems. She should stay home with this child until its old enough and has optimum health for someone else to care for it. A father in the home would make this possible.

After raising 8 children I know that no one else will love and care for this child the way the mom would. And if the child had a choice, I bet he/she would prefer mom to just any caregiver.

[zhanaya]

05:29 PM on 06/15/2011

here's hoping you will continue to be as lucky as you clearly have always been in the past. even married people have lost their homes, but no matter; our concern right now is on YOU and the fact that you would never do what this woman has done. congratulations all around to you and yours.

[Kevin Newton]

02:10 PM on 06/15/2011

Macroeconomics simply deals with the market forces of supply and demand. If the President wrote that many additional letters their value would plummet and demand would evaporate, and the status quo would remain unchanged.

If people want to get out of financial difficulty (and this applies to the country as well) they simply have to earn more than they spend - and if they're not doing that currently then they need to slash their budget until they do. Living beyond one's financial means is irresponsible and ultimately leads to problems. Many Americans, as well as the Federal Government itself, are learning this lesson the hard way.

[Pinchy]

02:31 PM on 06/15/2011

People still complain that it's not fair that banks are starting to require 20% down like the old days. If you don't have 20% to put down on a house, then you shouldn't buy one. Waiving the 20% requirement just inflates the home prices anyway. So in the long run, eliminating down payments doesn't really benefit potential home buyers.

[Jill1975]

06:07 PM on 06/15/2011

Ultralow interest rates and teaser rates also inflate the prices of houses so they are of no long term benefit.

[PatLow]

03:18 PM on 06/15/2011

So when foreclosures drive the price of your house down to a point where you will never recover, one should simply slash spending to adjust? Not all foreclosures are from folks who cannot afford the payments. Some are making a financial decision and simply walking away from a toxic asset.

[Kevin Newton]

05:12 PM on 06/15/2011

You're correct - some people are just choosing to walk away from a toxic asset. That is their choice, that is not the fault of the industry. At its most basic level, when one finds one can longer afford financial commitments then one must adjust their budget to suit the situation. We can denigrate the financial industry as much as we wish (and they deserve it too!) but the crux of the matter is that people signed on the bottom line and they have a responsibility for the debt to which they contracted.

[TexasMother]

01:29 PM on 06/15/2011

Wow! I had the same thought!

[Fonsini]

01:51 PM on 06/15/2011

Which one, he had several.