THE “GOLDEN TICKET MORTGAGE” PLAN
The “GOLDEN TICKET MORTGAGE” Plan
created by Anthony Migyanka
Chairman, A.G. Foster-Lowry Financial Services
9400 N. MacArthur Blvd., #124-627
Irving, Texas 75063
http://mobilemoneyminute.wordpress.com
Submitted to Laurie Maggiano, Chief of Homeowner Preservation Office, Department of US Treasury
Problems to be solved by the “GTM” plan:
1. Because of the housing market collapse, an estimated 13,000,000 Americans may walk away from their current mortgages, in addition to the hundreds of thousands who already have.
From an April 23, 2009 Bloomberg.com article:
Mortgage delinquencies increased to a seasonally adjusted 7.88 percent of all loans in the fourth quarter, the highest in records going back to 1972, the Mortgage Bankers Association in Washington said March 2. Loans in foreclosure rose to 3.3 percent, also a record and up from 2.04 percent a year earlier.
Obama’s $75 billion plan to reduce foreclosures by modifying mortgages targets as many as 4 million homeowners. Foreclosed properties helped drive down home prices in 20 U.S. cities by an average of 19 percent in January from a year earlier, the fastest decline on record, according to an S&P/Case-Shiller index.
From:
Hope for Homeowners
Grade: F
The Plan: Enacted on Oct. 1, Hope for Homeowners was to be the main foreclosure rescue plan from Congress, which allocated $300 billion for the effort. Supporters in Congress, like Massachusetts Representative Barney Frank, said the program would allow hundreds of thousands of borrowers, perhaps millions, to refinance into lower-cost loans by cutting the amount they owed, which for many at-risk-of-default homeowners was more than their house was worth.
The Result: So how many people has Hope for Homeowners saved from foreclosure? Zero. There have been 326 applications in the three months since the program started, but none of those people — let alone the nearly 6 million homeowners who, by some estimates, may face foreclosure in the next few years — have received a new mortgage or a modification for the one they have. What’s more, none of the major mortgage lenders, such as Bank of America, Citigroup and Wells Fargo, has signed on to the loan-principal-reduction program — which gives Hope for Homeowners little chance of being successful anytime soon. “Foreclosure is the problem we have to spend a lot more effort trying to solve,” says the Economic Policy Institute’s Robert Scott. “We need to put a floor under housing prices, and stopping foreclosures is the way you do that.”
The “GOLDEN TICKET MORTGAGE” Plan will put these people back into their homes and keep them there.
2. From:
The Looming Crisis in Commercial Real Estate
By MICHAEL WEISSKOPF Wednesday, Apr. 22, 2009
A sign advertises space for lease at a strip mall in Chicago
Scott Olson / Getty
The credit crunch has thus far focused on the residential mortgage mess. But with $1.3 trillion in loans to shopping centers and other commercial properties coming due between now and 2013, another time bomb is ticking. In a report scheduled for release on Wednesday, Deutsche Bank estimates that at least half the loans — and two-thirds of those packaged and resold as securities — will not qualify for refinancing. As a result, many borrowers will likely default, leading to losses on securitized mortgages of $50 billion or more and losses of at least $200 billion on commercial real estate loans overall, according to Deutsche analyst Richard Parkus, who authored the report. “People are only now beginning to realize there is a looming crisis,” Parkus told TIME.
Financial analysts believe government incentives to banks to extend existing commercial real estate loans will be necessary to limit the damage.
Property values have plummeted, with sale prices down as much as 45% from the peak in 2007, Deutsche Bank reports. And vacancies are up — expected by year’s end to reach 13.5% for retail and 17% for office buildings — cutting potential income that commercial properties need to make their mortgage payments. Some areas will be even worse. Vacancy rates in midtown Manhattan, already at 12.7%, are expected to reach 19% by year’s end, real estate experts say.
The delinquency rate for commercial real estate loans hit 1.8% in March, triple that of a year ago, according to Scott Talbott, a lobbyist for the Financial Roundtable, which represents the largest lenders. “Losses from commercial real estate are the next economic shoe to drop,” he said. “This issue has moved to the forefront….”
Because of the real estate market collapse, and the staggeringly high number of commercial real estate vacancies, projected worsening future vacancies, and the impending bankruptcies of REITs, funds and other commercial real estate investors:
Issuing “Golden Ticket Mortgages” for these properties would, like the residential “GTM”, freeze the asset value of their properties, put in a sound floor price for their markets, and keep borrowers paying their mortgages.
3. From Bloomberg.com:
Mortgage Investors Form Battle Lines Over Housing Aid (Update1)
By Jody Shenn
April 23 (Bloomberg) — The head of Greenwich Financial Services LLC warned bond investors in Washington last month that government efforts to reverse the housing slump are doing more harm than good by undermining debt contracts.
Prices of many mortgage bonds have plummeted in the past two years as delinquency rates on the underlying loans soared. Mounting losses from securities tied to subprime home-loans caused credit markets to seize up in August 2007, triggering a slowdown in the U.S. economy that spread around the world.
Fixing the mortgage market and stabilizing housing prices would help Obama end the worst U.S. recession since 1982.
The U.S. mortgage-finance system depends on bond investors. About 64 percent of the value of America’s home loans is bundled into bonds, a market that is 10 percent bigger than the sum of Treasuries outstanding. Mortgages account for 80 percent of consumer debt, and housing costs represent about 22 percent of the economy, Federal Reserve and Hoover Institution data show.
A congressionally appointed panel overseeing the U.S.’s $700 billion finance-industry bailout said in a March 6 report that government action is needed to encourage loan modifications because soaring foreclosures “injure both the investor and the homeowner.”
Obama’s Plan
Mortgage delinquencies increased to a seasonally adjusted 7.88 percent of all loans in the fourth quarter, the highest in records going back to 1972, the Mortgage Bankers Association in Washington said March 2. Loans in foreclosure rose to 3.3 percent, also a record and up from 2.04 percent a year earlier.
While billed as beneficial to mortgage investors, Obama’s plan will mostly be ineffective in cutting losses because it focuses on lowering payments rather than reducing homeowner debt, said John Geanakoplos, an economics professor at Yale University in New Haven, Connecticut. Many borrowers with “negative equity” will choose to default anyway, he said.
The congressionally approved program was designed to help 400,000 borrowers when it started in October; 51 of the loans have closed, said Lemar Wooley, an FHA spokesman.
With the clogging of the secondary market of RMBSs and CMBSs, banks are unwilling or incapable of lending because of lower capital ratios.
A “Golden Ticket Mortgage” can be issued to any bank in a dollar-for-dollar exchange with that bank for their “toxic” assets on their balance sheet.
The value of the banks’ “Golden Ticket Mortgages” would be at the current mark-to-market rates.
Additionally, the Treasury SPV created to manage the “GTM” plan could open a window at its discretion to buy or sell loans or MBSs from banks or private capital at different higher bid prices, depending upon bank TCE needs, demand for such assets by private capital, or further retirement/re-securitization of underperforming loans.
The bank’s “Golden Ticket Mortgage” acts as a credit facility, but because it is now off the balance sheet and being held by Treasury (in a newly-created SPV), it would count toward Tangible Common Equity, and allow banks to resume lending and creating/selling new MBSs.
No financial incentives will be needed to bring private capital back to the secondary lending market.
By issuing “Golden Ticket Mortgages, Treasury will have firmed up the underlying loans, whether residential or commercial mortgages, on the front end, and will have therefore firmed up the securitized RMBSs or CMBSs on the back end, all without having spent one taxpayer dollar.
The legacy assets will turn into re-performing loans, or be retired, with the refinancing of the underlying mortgages, as now the real estate market is re-inflated to market values that match the current outstanding principal of loans, which is an instant credit boom, which will set off a corresponding refinancing boom (easily facilitated by the “Make Home Affordable” plan for homeowners). Therefore, these newly-performing loans will attract higher prices in the secondary MBS market, and with those profits, Treasury will have the ability to assist the worst of the worst homeowner/no-doc/ARM/interest-only dreck that is clogging up the market by providing Treasury aid to those homeowners, in an attempt to keep them in their homes too, and also create another market for single-family home rental properties in the instances where refinancing is impossible, and create a slew of taxable events that will pay for the cost of subsidizing ARM refinancing.
A few of the taxable events caused by issuing “Golden Ticket Mortgages”:
a. Retiring of MBS bonds.
b. Refinancing of underlying borrower mortgages.
c. The sale of a “GTM” home, and subsequent re-purchase of another residential mortgage.
d. Increased property tax revenues due to people remaining in their homes, in active repayment of their “GTMs”.
e. The increase in lending/borrowing that will occur as a result of the credit boom, due to the re-inflation of the housing market “GTMs”.
Under these three prior scenarios, the “Golden Ticket Mortgage” itself would literally be a certificate issued by the US Treasury. It would not be backed by a Treasury bond or other liquid asset, as it would be a credit facility, in each case.
No cash needs to change hands for these scenarios to be successfully transacted.
It is akin to similar IRS creations such as the FHA loan, 1031 Exchange or other incentives that affect the accounting of real estate transactions and bank capital ratios, and do not need liquidity to facilitate the transaction.
It would not require the expenditure of any TARP, Treasury or taxpayer funds, save only the cost of literally printing the “Golden Ticket” certificates, and the expense of managing the Treasury SPV through the vendor, A.G. Foster-Lowry Financial Services, which be estimated at less than $50MM per annum, but of course will be virtually insignificant when compared to the newly-created tax revenue generated by the taxable events as stated above.
SCENARIO 4:
THE CREATION OF A NEW TREASURY SPECIAL PURPOSE VEHICLE (SPV) to manage the credit boom and refinancing boom caused by the issuance of “Golden Ticket Mortgages.”
While we believe that simply issuing Treasury certificates will satisfy the necessary transaction requirements of scenarios 1-3 in the “Golden Ticket Mortgage” plan, we also believe that the issuance of “Golden Ticket Mortgages” can do even more to further the goal of Treasury, which is to end the current deflationary spiral, restart the financial economy in the United States, bring private capital back into the real estate and capital markets, and keep American citizens in their homes.
The issuance of “Golden Ticket” Treasury certificates will take care of all citizens, REITs, funds and investors capable of making their current mortgage payments, or, with the addition of a “GTM,” capable of refinancing their mortgage to a lower rate/payment, and, UNLIKE CURRENT PILOT PROGRAMS, IT WILL ENCOURAGE AMERICANS TO DO SO.
However, we also realize that while the “Golden Ticket Mortgage” plan will alleviate the suffering of millions of individual Americans and businesses, it is not a panacea. Further work is necessary to help all Americans, especially the ones caught up in the credit destruction such as ARMs, no-doc loans, interest-only, and other “exotic” mortgage products that have ruined a significant percentage of American citizen’s ability to borrow, buy a home and the corresponding wealth evaporation of the individual as well as the investor financing the underlying investment.
Additionally, we believe that the creation of a new Treasury SPV, managed by A.G. Foster-Lowry, will solve three more Treasury’s problems:
- The newly-created Treasury SPV will provide liquidity to Americans under served by simple refinancing, such as people currently in foreclosure, Americans who have suffered credit destruction due to ARMs and other exotic mortgage products, and allow them to repair their credit with manageable repayment plans as well as make credit affordable to them to purchase or modify or remain in their homes. The SPV will “separate the wheat from the chaff,” by retiring current MBSs and in doing so, cutting out from the MBSs the non-performing loans, pumping liquidity and credit facilities into the worst neighborhoods, and re-securitizing the “good” loans firmed up by “Golden Ticket Mortgages,” and paying for it with the newly-created tax revenues as well as the sale of MBSs re-securitized by Freddie Mac, to investors eager to buy “GTM”-backed loans that have a stable market floor price.
- The newly-created Treasury SPV will solve the problem of what to do with problem child FREDDIE MAC.We recommend creating a reverse-merger with A.G. Foster-Lowry Financial Services and FREDDIE MAC, and renaming the public entity Treasury-Owned New Liquidity for Markets International and Global (TONY MIG). We recommend financing TONY MIG with the issuance of a 15-year Treasury bond: a callable convertible global debenture at 1.95%. We recommend issuing shares of TONY MIG to Treasury in exchange for Congress’s shares of FREDDIE MAC, and using issuing a share exchange for all outstanding FREDDIE MAC shareholders, using TONY MIG capital from the bond issuance and $30,000,000,000 of Congressionally-approved TARP funds. We recommend TONY MIG be set up with parallel funds. In accordance with FANNIE MAE and GINNE MAE parlance, calling the 15-yr TONY MIG bond, a “JUNIOR”, and the companion bond, a parallel sinking fund to purchase and retire “Juniors” with earnings from the SPV operation, the “SOPHIA” fund. We recommend Juniors convert to 11% of outstanding shares of TONY MIG. TONY MIG will purchase loans from troubled banks and securitize them with the newly-merged Freddie Mac securitization agency capability.
- TONY MIG, by its participation in the capital markets, especially in the financing of loans and securitization of them, will become the “Super-Regulator” Treasury Secretary Geithner believes (as do we) is necessary in our capital/financial markets moving forward, to eliminate the moral hazard created by bailing out the current participants in the financial markets crisis. TONY MIG will have the ability to act quickly in times of future financial crisis, to purchase “toxic” assets with its own capital, and not have to rely on private capital to restart a clogged or abandoned market. TONY MIG can also quickly improve TCE with the further issuance of “Golden Ticket Mortgages,” before the collapse of financial institutions like Lehman Brothers, or the near collapse of Bear Stearns or IndyMac Bank, or Washington Mutual, need take place.
If we have learned any lessons in the recent market collapse, we have learned speed is of the essence in preventing the domino effect of credit destruction and wealth evaporation across the entire economy.
Additionally, being a global debenture, TONY MIG can assist other countries in their own “bailouts,” providing rapid liquidity to international capital markets, real estate markets, and foreign government assistance.
Also, by being a global debenture, TONY MIG can list on multiple stock exchanges worldwide, to take advantage of differences in local accounting rules and currency fluctuations, that will further improve the facility of the “Sophia” fund, as well as improve the capital position of the SPV in general. (For instance, Australian accounting rules count preferred shares as an asset, not as a liability; other countries retain the ability to keep intangible assets (like the value of a “GTM” guarantee) on the balance sheet, and not have to write it down as goodwill or depreciate it over time, and the ability to write up assets we believe are worth more than we paid for them.
In Summary, the four facets of the “Golden Ticket Mortgage” plan solve the current deficiencies in the financial marketplace for Treasury, create a market “Super-Regulator” to remove the bailout moral hazard moving forward, and restart the US and global economy.
A.G. Foster-Lowry is uniquely positioned to provide all the services necessary to:
A. Issue “GTM”s. With our proprietary software, (we are also launching as SEC-mandated online shareholder forums for public companies), we can handle the millions of “GTM” requests and applications by American citizen residential homeowners and commercial property owners.
B. We can work efficiently with current Treasury vendors like Alluvion Securities, to provide updated “GTM” recipients’ information to Alluvion and other lead banks, to better inform their MBS pools of which underlying mortgages have been converted to “GTM”s, and therefore will not only firm up said RMBSs and CMBSs, but also fetch a higher price for them on the secondary market.
C. With our proprietary software, Treasury “GTM” recipients (and this includes individual citizens, REITs and banks) will be able to communicate with Treasury via our secure web portal’s email, blogs, postings, and calendars, to provide timely notifications of “GTM” approvals/retirings and/or Treasury status updates of TONY MIG “GTM” retirings via the “Sophia” companion bond, or other TONY MIG investment news, press releases, etc.
D. With our proprietary software, Treasury can send out SMS alerts to “GTM” recipients, as well as investors, to notify them of updates at our web portal: for “GTM” approvals, status updates, new TONY MIG or Treasury press releases, quarterly filings, etc.
E. With our proprietary software venture, Mobile Money Minute ™, Treasury can send 60-second video updates, distributed via our tv/web/mobile platform to “GTM” recipients, shareholders, media, news outlets and investors.
F. With our proprietary software, Treasury can host and tag “GTM” applications, information on newly-created RMBSs, CMBSs or other TONY MIG financial data in XBRL, and post it at the TONY MIG web portal for easier searching by MBS investors, TONY MIG shareholders, and the public at large.
G. Additionally, with our proprietary software, Treasury can communicate efficiently and securely with its lead banks, and other vendor/partners and multiple departments and agencies in its own policy initiatives.
Faithfully Submitted by:
Anthony G. Migyanka
Chairman
A.G. Foster-Lowry Financial Services
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Support for the CDFI Fund (Department of the US Treasury) Pilot Program Proposal, “Golden Ticket Mortgage” plan, submitted by Anthony Migyanka, Chairman of A.G. Foster-Lowry Financial Services.
With the relative failures of the TARP, TALF, and “Making Homes Affordable” programs initiated by the US Department of Treasury, we have proposed to them an alternative plan to assist in the US banking bailout and homeowner mortgage relief.
The “Golden Ticket Mortgage” plan does five major things for you:
1. It turns your mortgage into a “Golden Ticket Mortgage” meaning that the Treasury Department will GUARANTEE your home will not lose value as long as you keep making the payments.
2. It turns your commercial mortgage into a “Golden Ticket Mortgage”, meaning that the Treasury Department will GUARANTEE your commercial property will not lose value as long as you keep making the payments.
3. Banks can receive “Golden Ticket Mortgages” for their “toxic” assets, as the “GTM” counts toward Tangible Common Equity, and start lending again.
4. IT DOES NOT COST THE AMERICAN TAXPAYER ONE CENT.
5. It can be utilized for any mortgage in any country in the world.
The “GOLDEN TICKET MORTGAGE” plan has been presented to CDFI Fund (a department of the US Treasury) Director Donna Gambrell. If you would like to learn more about it, or would like to see it become a Treasury Department Pilot Program, email Ms. Gambrell at:
cdfihelp@cdfi.treas.gov,
and tell her so. Or you can call her at:
Phone: (202) 622-8662
Fax: (202) 622-7754
Address: 601 Thirteenth Street, NW, Suite 200, South,
Washington, DC 20005
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