Proposal: OE People’s Bank

Proposal: OE People’s Bank

Postby JerryB » Thu Dec 22, 2011 8:59 pm

The problem with most foreclosures is that homeowners are underwater in their mortgages – they owe more than the home is worth (market value).

When the bank takes over the property, they often liquidate the property and sell it for 15-30% below the market value. Often millionaires take advantage of the foreclosures. They can afford to pay cash for the sale, which makes it more difficult for regular people who need to purchase a home, but have a hard time coming up with the down payment and payments the banks require.

So what is happening is that the banks are throwing homeowners out into the street and turning the property over to rich speculators who flip the property and make a huge profit.

What would happen if a bunch of people pooled their money to form a cooperative people’s bank. Then they could take their pooled money and use it to buy a foreclosed home at the bargain basement price, and then sell it back to the homeowner again at the lower price with lower monthly payments the homeowner could afford. The homeowner could keep their home, the investors could be repaid a decent rate of return for their money (say 3%), and the investment would be safe because in the worst case, if the homeowner couldn’t make it work, the home would revert to the cooperative. The cooperative could rent the house out to the same homeowner, or to other homeless people, or find another buyer. The cooperative could be more flexible than most property managers, and do things like rent to own options.

Wouldn’t it be good if the regular people could put the banks out of business, and work for the community and the people instead of just maximizing profit for shareholders?

Do you think the legal students could do the paperwork and set up everything, or we could pool resources to hire a lawyer? The cooperative could consist of 20 people who each invest $10,000. Co-op members could buy fixer uppers too, repair them and flip them to build up funds and share the profits. Regular people could use their savings to buy shares in the cooperative or use their labor, fixing places up, to purchase shares.
JerryB
 
Posts: 95
Joined: Wed Nov 09, 2011 10:20 pm

Re: Proposal: OE People’s Bank

Postby Mary B » Sat Dec 24, 2011 10:00 pm

I love this idea.
Mary B
 
Posts: 22
Joined: Tue Nov 15, 2011 8:15 am


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