Fix the economy with carrots and sticks.

Banks and other businesses like penalties so we should have a few for them...

A penalty for each foreclosure. Maybe $10K or equal to the combined attorneys' fees, whichever is greater.

A penalty, maybe $5K per month for each vacant house. After 90 days if not paid and not still unoccupied, the locality can condemn it from the forecloser (or slum landlords too). This could hire people to renovate the houses that need it, and for the security and maintenance communities are stuck paying for.

A penalty for each job outsourced or offshored (not just once but as long as that job is done elsewhere), and for each layoff. On the other side of the coin, as Obama suggested, a "reward" for each new job created (but at more than minimum wage - say $12 to $15 at least). This should be higher on the penalty side to discourage churning.

I'm sure there are more along the same lines which would be good. (Nasty stock practices come to mind of course.) These are just the ones I was thinking of regarding the housing/jobs slice of the economic problem.

But penalties are something the vultures of our society understand, since that's their gig. Let's use it back on them. It might change how they calculate what's in their "self-interest". And also it would compensate those who pay the cost of it. These fees could go into a trust fund designated for the corresponding services needed - as the highway taxes used to go to build roads. Or to compensate individuals who are harmed.

I think it could fund a lot of the solutions we'll need to fix this mess. It's only right that those who choose to take such actions for their own benefit should pay the freight for it - and not in a general higher-taxes way which costs everybody, but targeted directly to those specific entities which are doing the damage. Straight cause and effect.

A penalty for each foreclosure.

What do you think foreclosure is, exactly? A money-making venture? The mortgage owner loses a LOT more than 10k when the mortgage goes kablooey.

Furthermore, in many cases the actual mortgage owner is not the party who originally negotiated the terms of the mortgage, so you're not even penalizing the right people.

A penalty, maybe $5K per month for each vacant house.

A penalty applied to whom? The owner of the house? Banks sell foreclosed properties at auction, so I assume you'll be applying this to the new owners, right?

A penalty for each job outsourced or offshored

and for each layoff.

This is stupid. In order to make such a penalty feasible, it'd need to be equal to or greater than the cost of laying the person off. This penalty has the potential to cause MORE layoffs, not less. As for your outsourcing penalty, I don't see how it could possibly be enforceable, and if it were would probably cause companies to move overseas wholesale, to nations with sane business regulations.

causes losses to others? Such as the municipality? The surrounding neighbors? So an investor should just foreclose, leaving properties sit empty indefinitely because he/she/they/it feels like it? And the municipality should pay and pay and pay whatever it costs society for that private decision?

This would motivate them to make sure there's another occupant - whether a buyer or renter - as fast as possible... and consider the necessity and difficulty of arranging that BEFORE uprooting the deal they have on the table with the current borrower. It might provide some incentive to negotiate a sensible solution, taking all the other interests into account instead of just the almight investor. They act like spoiled brats, and we cater to them. And pay for it. Why the hell should we?

It would also stop all of this eviction of renters wrongfully, just because the absent owners of the property were foreclosed.

And yes, I'd apply it to the buyer of a foreclosed property which sits empty just the same. It's just like "late fees", just the cost of doing business in that context.

I say give the investor/forecloser a reason to either sell or rent each home in a timely manner, or reconsider whether it's an action worth taking.

We don't charge anything for these costs which the public incurs. It's high time we DID!

But all your plan does is make foreclosure slightly more expensive to the mortgage issuer.

So an investor should just foreclose, leaving properties sit empty indefinitely because he/she/they/it feels like it?

No, banks don't foreclose because they "feel like it." They foreclose when payments on the mortgage are not met. So to avoid foreclosure a way of ensuring the payments are met must be found. This could mean restructuring, or it could mean direct aid of some form to those facing foreclosure. Unfortunately, there's little way of restructuring a lot of the bad subprime loans because there's simply no way of making the house affordable on the salary of the owner. That's a huge part of the problem, and nothing you've said changes that. Again, foreclosure is VERY expensive for the lending institution, and all your idea does is make it slightly more expensive.

It might provide some incentive to negotiate a sensible solution

I am all for trying to prevent foreclosures, but I'd favor direct assistance to those facing foreclosure, rather than this roundabout route.


And yes, I'd apply it to the buyer of a foreclosed property which sits empty just the same. It's just like "late fees", just the cost of doing business in that context.


Why in the name of a crippled, half-mad Jesus would I buy a foreclosed property if I was going to have to pay a ridiculous $5000 per month fine? What you're suggesting would simply destroy the market for foreclosed properties. Given that it's difficult to impossible even for people with good credit to get a mortgage right now, this simply exacerbates the situation and drives down the value of property further. Your suggestions would actually make the situation worse, not better.

remodeling industry to work. I'm sure there are other people who would benefit from this too.