5% Fixed

We received an e-mail today from President Barack Obama, via Organizing for America. In it, he explained that:

[Virginia] “Governor Tim Kaine has agreed to record a video outlining the recovery plan and answering questions about what it means for your community. You can submit your questions online and then invite your friends, family and neighbors to watch the video with you at an Economic Recovery House Meeting.”

Well, I wasn’t about to pass up the opportunity to ask a question. So here’s what I submitted to Governor Kaine:

I would like to see a law passed which would reset all existing mortgages to 5% fixed, for the remaining life of the loan (including HUD and any other mortgages which cannot currently be renegotiated). This would be done automatically by the banks which currently hold the mortgage. The homeowners would not have to apply for this 5% rate nor pay fees nor hassle with any paperwork. It would just happen. If a homeowner already has a mortgage interest rate of 5% or lower, then they get to keep that rate.

Then, as part of the same law, all new mortgages would be written at 5% fixed for the life of the loan. This 5% law would be in effect for the next five years. After that, banks could set competitive rates again. But all homeowners with those 5% mortgages would keep that rate as long as they continue to live in that home.

I believe this 5% law would put a little (or a lot) more money in every homeowners’ pocket. That money might well flow back out into the economy via consumer spending. Or that money might help stave off personal financial crises for families living on the edge. The 5% law would also level the playing field. It might also mean that some of the homes standing empty due to foreclosure, could soon have new homeowners, which would strengthen communities.

My question: How soon can we make this happen?

Do you have suggestions and/or questions about the Economic Recovery? Here’s a link to where you can learn more and submit your own question to Governor Kaine.