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| Solving The Housing Crisis: Create An Entrepreneurial Class For New Immigrants To Buy Foreclosure Properties The housing market is still at the bottom of the well. We need drastic actions to float it back to the top. The problem is a basic supply and demand issue. We have the supply but not the demand. Potential buyers in the US are content on sitting on the sidelines until the economy picks up. The fortunate that still have a job are cautious. They are not prepared to make commitments that might turn sour if they lose their job. Currently, there are two programs catering to the immigrant entrepreneur. The B1-Business Visa is good for 6 months and it gives the visiting person a chance to explore business opportunities in America. The other immigration program is the Immigration Petition by Alien Entrepreneur, which requires a Form I-526, is good for two years. There are strict conditions. 1. The entrepreneur must create 10 new jobs. Family members do not count. 2. The entrepreneur must be a manager or director of the company. 3. The entrepreneur must prove that he has the financial ability to invest in the business. 4. After two years and the new immigrant has met all the conditions, he would be given a permanent green card with no conditions. Going "offshore" to create demand for housing might be easier than we think. People still see the US as a land of opportunity. In 2009 we granted legal residence status to 1.1 million people. Between 2000 and 2005 nearly 8 million immigrants came to the US. This figure was higher than for any other 5 year period. We have to give an incentive to the entrepreneurial class to bring their skills and their money to the US. But we have to be very selective in whom in let in. We do not want criminals. We need the best immigrants. It could take 2 years or longer for immigrants to get to the US. Many of them would like to jump the line. The is where the entrepreneurial class program would clear some of the backlog. It would put applicants on the fast track to a US green card. We could cut the waiting time to about 6 months. The potential immigrants must sign up for our “Immigrant Home Buyers Program”. This special program would allow this new immigrant class to purchase a house that is currently in foreclosure, in the city of their choosing. The primary condition to buying the house is that the house must be their primary residence. Getting a mortgage might be a challenge considering that they are new to the country. So they might not have any alternative but to pay cash. Paying cash would not be a bad idea. Think of all the cash being pumped into the economy. Immigration is a definite positive for the economy. Immigrants contribute $10 billion a year to the US economy. This figure is from "The New American: Economic, Demographic and Fiscal Effects Of Immigration", by James Smith from the National Research Council. Also remember that immigrants were involved in the founding of Google, Yahoo, eBay and Sun Microsystems. There are some that would dismiss this program because it would have the “intent” of draining the smartest and wealthiest citizens from other nations. However, we already have an immigration program for the business class. We give special status to people who can buy or start a company. The company must be able to create 10 new jobs. The individuals need to show a substantial networth. Such individuals do not have to wait years for a visa or green card. As soon as the background check is completed and we are assured that the person is not a criminal or a terrorist, the papers are signed and the deal is done. We could take 100,000 families a year under this special program. If the program is a success, we could extend it for 5 years, or even make it a permanent feature of the US immigration green card. Depending on the strength of the housing market we could adjust the number of houses available each year. A strong vibrant housing market one year might mean that we can set the limit at 20,000 homes. While a weak market might warrant 100,000 homes. The new immigrant has to keep the house for a minimum of 5 years. The will be a penalty of $20, 000 if he sells before the 5 years are up, but the amount will be prorated. For example, if afetr living in the house for 3 years, he feels that there will be a good profit in selling, he can sell and pay the prorated amount of $10,000. This figure no doubt will be factored into the selling price. Paying for this program would be easy. The seller pays the US government a fee of $1,000 for each house sold. How does the new immigrant see the house before coming to the US? The immigrant will have to be in the US in order to search for a house. We could allow him inti the country and give him 6 months to find and buy a house. Meanwhile we would hold a deposit of $20,000 in an escrow account until he finds a house. If he doesn't find a suitable house, he can get an extension for 3 months. This would require him to put up an additional $10,000 in the escrow account. With all the foreclosure activity we expect the immigrant to purchase a house within 9 months. If he doesn't buy a house he has to return home, and he forfeits the money in the escrow account. On returning home his application will be at the back of the line. Remember, I am not talking about giving someone US citizenship. They still have to go through the normal process and follow all the rules and regulations. We have to move forward on the new entrepreneurial immigrant program before other nations make it very rewarding for their citizens to stay at home. They will also start encouraging forign national to immigrate to their country. I am thinking of growing nations like Brazil, India and China. Two of these countries,China and India, currently provide the US with most of its immigrants. However, as these nations get stronger economically, it would be harder for their citizens to pull up roots and start all over again in a foreign country. prev: next: |
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| We Need A Stimulus For Homebuyers: $7,500 To Buy A Foreclosure Home We Need A Stimulus For Homebuyers: $7,500 To Purchase A Foreclosure Home...any home, any buyer. The economy has stalled and has come to a screeching halt. The housing market is still in the dumps. There is a large inventory of foreclosure homes and no-one knows how to sell them. Realty Trac estimates that there are close to 1.9 million foreclosures in the USA in 2010. Meanwhile, we see our friends, co-workers and neighbors go further, and further underwater with their mortgages. As a nation we are getting poorer by the minute. The Center for Responsible Lending estimated that the United States of America will lose home equity wealth of $1.9 trillion between 2009 and 2012. At the core of the devaluation of housing is the foreclosure fiasco. California alone is projected to have 1,888,716 foreclosures from 2009 to 2012. Florida is close behind with 1,482,279 projected foreclosures during the same time period. The tax credit of $8,000 for first time buyers did help move some housing inventory. But it wasn't enough to give the housing market some traction. Many economists opposed the program. Some were of the opinion that we were giving money to people who were going to buy a house anyway. In the end, the bill for the tax credit was about $15 billion. The program helped over 1.5 million people buy a house. How long they will be able to stay in the house is another issue. The "foreclosure recovery program" that I am proposing will allow anyone to buy a foreclosure property. The tax credit will be $7,500. The house in question could be for a primary residence or for an investment property. The $7,500 tax credit can be use for closing costs, a downpayment or for any other costs associated with the purchase of the house. Any type of housing is acceptable with the exclusion of condos, farm properties and trailer homes. Once the house is purchased, the buyer has to keep ownership for a minimum of 5 years. If for whatever reason the homeowner has to sell the house, the $7,500 credit has to be repaid. This will be on a prorated basis. The benefit of targeting foreclosed properties is that the neighborhoods will be revitalized. In addition, the municipalities will start deriving some property tax revenue. If you live in a neighborhood where there are a lot of foreclosure houses there are costs that are associated with having all these vacant properties. There is crime. There is vandalism. There is a drop in existing home values. There is a cost for the lack of self esteem among children who live and experience these "vacancies" day in and day out. Jobs will be created with this program. We will need appraisers, housing inspectors, and an army of contractors to rehab most of the properties. Products will be sold, everything from lawn mowers to appliances. Readers of this articles also liked: How To Cancel Private Mortgage Insurance Your Mortgage Approval In 9 Easy Steps Fannie Mae Sets Timeframe For Foreclosures This Tax Gives You Money Each Year... Email me your comments. prev: next: |
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