TAKING A LOOK AT THE FAILURE OF THE DODD-FRANK BILL FOR EVERGREEN COLORADO REAL ESTATE INVESTORS
The latest Obama foolery comes from the Administrations FDIC who insures the savings accounts of investors in US banks. Of course, true to Presidents Obama leadership skills the FDIC is 43.5 billion dollars in the red, making it completely and totally bankrupt. The FDIC is another federal government failure. Now the FDIC is going to straighten out the mortgage investment business!
They are going to administer part of the Dodd-Frank new financial law which was written by the major banks and insures that the tax payers will continue to bail out Wall Street and the too big to fail private banks. Here is how the new rules will work.
Say you buy a home worth $300,000 dollars. If you put down 20% or $60,000 then go to a bank and take out a mortgage loan for say $240,000 dollars; the bank needs to have 10% or $24,000 dollars in cash reserves to make the loan. They can borrow the ten percent form the Federal Reserve at 1/2 % interest if they want. Your bank writes the loan by creating $216,000 dollars out of thin air-it’s called fractional reserve banking (google it). This is how money is created in America, the banking system just prints it up (that’s why the banks always have the nicest building in town and your checking account is free).
Now the new Dodd-Frank bill, which is going to protect you, will allow the bank to sell the loan as a mortgage backed security only if the bank that writes the loan keeps a 5% security interest in the loan; in our case $10,800 ( $216,000 X .05=$10,800). This is supposed to protect America from another Barney Frank-Chris Dodd induced mortgage meltdown like these two nincompoops caused in 2008. Now the bank can use the $10,800 5% hold back security as collateral to borrow that amount form the Federal reserve and make a new $108,000 dollar loan by creating another 108 thousand dollars. They must keep another 5% security interest in the new $108,000 or $5400 which they can again use to write another loan.
Then the bank can sell both loans as mortgage backed securities and net $216,000 + 108,000 = $324,000 less the 5% security hold back or $16,200.00 ($10,800 + $5,400 = $16,200). The bank now has created $307,800 dollars that they pocket and still have the $16,200 in created cash to use as a 10% reserve for more loans.
Now you are going to spend the next 30 years of your life paying back, with interest, your $240,000 mortgage that your banker and the Federal Reserve just created out of thin air.
Now wouldn’t it be smarter if our government created the $324,000 plus 30 years of interest, and used it to pay legitimate government expenses, and pay off the federal debt. We should cut out the Federal Reserve, which is a private bank, and just pay the local bank a fair fee for booking the loan. This is what our Founding Fathers wrote into our constitution when they gave congress the right to coin money. Created money was to benefit we the people not them the bankers.
We can see why nothing will get done in Washington with all this created cash floating around. The congress and the White House don’t want to return the right to print money to the people because they will cut themselves off from the money tree.
Wake up America only the grassroots will put a stop to the corruption of the Federal Reserve, the too big to fail banks, and the politicians who profit from stealing the right of we the people to create the dollars in our economy and use those dollars to benefit we the people..
There are few places you can hide from this economic nightmare. If You want to invest for the future you need to understand the basic foundations that the system is built on. Please, give us a call and we will show you how to make money in these perilous times. We are MARK ENGLISH REAL ESTATE and are Your one stop shop for all Your EVERGREEN COLORADO REAL ESTATE needs. We are also an EVERGREEN COLORADO CUSTOM HOME BUILDER. We know Real Estate, and land, and we know financing; we will work hard to prosper You. Contact us at 303-674-0148, Email us at markenglishrealestate@msn.com or visit us on the web at www.evergreencoloradoliving.com. Don’t forget to register for our FREE REAL ESTATE BUYER INCENTIVES.