A new report argues that if banks wrote down the mortgage principal of underwater borrowers it could pump $71 billion per year into the economy and create more than 1 million jobs annually. The report, “The Win/Win Solution: How Fixing the Housing Crisis Will Create One Million Jobs,” comes from The New Bottom Line, a campaign that represents about 1,000 nationwide faith-based and community organizations.
The campaign argues in the report that by lowering home owners’ mortgage payments by an average of more than $500 per month–or $6,500 per year–that it would free up about $6 billion dollars per month that home owners could then spend on such items as buying groceries, household necessities, school supplies, etc.
“Home owners across the nation are struggling to pay their boom-era mortgages with their recession-era salaries and the economy is suffering for it,” according to the report. “Writing down the principals and interest rates on all underwater mortgages to market value would serve as the second stimulus that America so desperately needs, only without added costs to taxpayers.”
The group is pressing State Attorneys General, who are currently in settlement talks with the nation’s largest banks over allegations of foreclosure abuses, to stand firm on its request for principal reductions for underwater borrowers.
Source: “Fixing the Housing Crisis Would Create One Million Jobs Annually,” RISMedia (Aug. 21, 2011)
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