NATIONAL AND STATE HOUSING MORTGAGE PROGRAMS AND ECONOMIC GR

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NATIONAL AND STATE HOUSING MORTGAGE PROGRAMS AND ECONOMIC GROWTH

A national and or state housing program is an infrastructure that is developed nationally and statewide to provide housing to the populace economically and efficiently to make the lives of the people better, at a profit with the least investment risk, and create unimaginable wealth to the nation. ‘A mortgage involves an agreement between a lender and a borrower where the lender decides to loan the borrower money to purchase property under the condition that the borrower promises to repay the loan and provides that land as security for their payment of the loan; when the loan is repaid in full, the lender will release the property to the borrower. If the borrower defaults on that loan, the lender may take its security (the property) in order to satisfy the debt owing to it. In the event of a default on that loan, the liability may not be fully satisfied by the sale of the property and the borrower may therefore be responsible for the payment of the shortfall. Mortgages are the primary means by which people finance the purchase or their homes’. This mortgage system on housing is one of the major defined differences between an underdeveloped nation and an affluent nation.
Our needs are diverse but we share the same need for shelter, a place to keep ourselves and our children save and warm. Housing is one of the primary needs of the people in a society. When needs are fulfilled, it is always profitable. When 164 million needs are fulfilled it should be very profitable. It is the primary needs of the people of a nation that is the foundation of that society. When we drop an object in the river there is ripples of water that creates waves. The larger the object dropped in the water the bigger the wave produced. The bigger a society provides the primary needs of her people the larger the impact (wave or added values) on economic wealth. It is a narrative that we have to implant in our minds. It goes as follows…. We go to school to learn, so that we can produce goods and or services when we graduate. We produce goods and or services in exchange for money to provide food and shelter to keep us alive, safe, and warm. For example, a teacher goes to work to provide the service of teaching and the earning is primarily to eat and provide shelter for the family. The excess disposable earning is what is saved in the bank only after we have met our primary needs. He/she purchase television, couches, cars, etc. only after the primary needs are fulfilled. What we all need in a society should be a major source of economic wealth. Think for a minute what we did before our new found mineral resources.
We can learn from other countries such as Canada who has the best housing mortgage system in the world. ‘Towards the end of Second World War, the government became concerned that the return of a large number of Canadian servicemen would lead to a shortage of family housing. In 1946 the Central Mortgage and Housing Corporation was set up with the aim that every Canadian family should live in their own home…. The CMHC was to help finance, build and manage housing. In 1954 this direct financing was changed into an insurance program so that private mortgage providers would finance new building. The Corporation, The Canada Mortgage and Housing Corporation had been credited with developing standard down payment terms, usually around 10%. These affordable down payments allowed families to afford their homes. Mortgage loan insurance is typically required by lenders when homebuyers make a down payment of less than 20% of the purchase price. Mortgage loan insurance helps protect lenders against mortgage default, and enables consumers to purchase homes with a minimum down payment of 5% — with interest rates comparable to those with a 20% down payment. To obtain mortgage loan insurance, lenders pay an insurance premium. Typically, your lender will pass this cost on to you. The premium payable is based on a percentage of the home’s purchase price that is financed by a mortgage. The premium can be paid in a single lump sum or it can be added to your mortgage and included in your monthly payments. Mortgage loan insurance is not to be confused with mortgage life insurance which guarantees that your remaining mortgage at the time of your death will not be a burden to your estate’. The mortgage insurance market is known to be very profitable as the average payout, the insurance industry’ profit ratio was 45% of contributions in 2003. This compared with average payouts of around 75% in areas such as auto insurance and personal accident insurance. As of March 31, 2013, CMHC's insurance-in-force was $562,600,000,000, representing an insurance risk of approximately $17,000 per Canadian.[5] It is a fact that the house and the land it is sitting on will go nowhere soon therefore investment in housing mortgage is considerably a low risk. It is also understandable to assume that the land and building almost always appreciates. And finally because the mortgage is insured the risk to investors is almost negligible. This structure is one of the unique technologies that define affluent from poor societies while the insurance premium creates money to the government. The purpose of creating this mortgage infrastructure was to provide housing for the war servicemen coming back home which is a worthy consideration, but it has however developed and provided Canada a very strong economic foundation (A big bang with big waves). This structure is so simple yet provided so much economic and social benefits.
Advantages of a National home mortgage program.
(a) Making the lives of people better. One can easily determine whether they are in a poor country or affluent country immediately at arrival. The landscape is unplanned. Houses are not built to code, many houses are half built and still in progress after 10 years. The people live in unnecessary poverty. They are stressed, corrupt, non-conforming to the rule of law as each seek for the means to attain their primary needs. A house mortgage will provide an affordable monthly payment over a reasonable period (10 – 25 years) that will enable ownership. The land scape will be better organized not only because the house is fully finance but because the financier will be stipulated to build to code and according to plan and there will be a city planning provision for this structure. The affordable shelter will lessen stress, deceit, corruption, makes the live of the people better and beautifies the landscape.
(b) Create equity and continuity. The planning of this mortgage structure is what really makes it work in Canada. This structure is not available to the rich or the poor but to everyone. The design is made to accommodate different income classes. It provided for those who are just married and starting a family, those who are not financially well off, and those who are rich. These different designs in cost of houses and the fact that every house is built to code enables continuity. As we progress in life and earn more we could sell our old houses and use the equity from the house to afford to have enough to purchase an appropriate housing for our larger family.
(c) Employment: There are many products and services utilized in building a house which creates employment.
(1) Services: Imagine how many service input goes into building a house. A real estate representative, designers, a surveyor, lawyers, architects, accountants, contractors, framers, electricians, painters, plumbers, carpenters, roofers, painters, floorers, landscapers, glass cutters for windows, masonry, house inspectors, installers for cupboard, sinks, bathtubs, toilets, etc.
(2) Products: Purchase of the land, lumber, electric supplies, lighting supplies, painting supplies, nails, screws, cement, toilet bowls, sinks, flooring, doors, windows, plumbing supplies, baseboard, doorknob, sands, gravels, roofing products etc.
(3) Retailers: Each of the products used creates employment for retailers and distributors that exchange all these goods
(4) The producers: All these products consumed create employment in industries that produces these products.
(5) Products we purchase in the house after it is built: television, tables, chairs, couches, beds, drawers, curtains, lighting supplies, landscaping supplies, cleaning supplies
(d) Fosters interrelationships between individuals and institutions. We now have a house and our monthly payment pattern foster a relationship between our banks or financial institution. We can use the equity on our houses as collateral for other needs which may not be for money only but may also be for collateral for our child’s first house. It is easier to transact business with our neighbours if it can be easily verified who we are, our equity, and assets.
(e) Revenue for the States and the federal government. It may now be easier to collect property taxes. The financial institutions may now collect and remit to appropriate authority property taxes as they collect their monthly mortgage. Since houses are built to code it is now easier to assign the appropriate property taxes.
Limitations:
A housing mortgage system is an economic and social program that could for ever change the livelihood of a society, the culture and the economy because of its impact (the big bang that creates a large wave). Therefore the planning is crucial to ensure its success. We must make sure that it does not create economic ‘class’ which will separate the poor and rich residences. We must plan the new housing to accommodate proper numbering of housing, covered sewers and sewer plants. We must ensure that the planning of these housing allow for ease in selling and purchasing homes that will enable continuity. All the needs for houses must be supported before it is started. The standardized rules of mortgage, the maximum rate to charge, the mortgage insurance and its oversight must all be in place. We must ensure that all the service, retailer, distribution and producers of the materials are licenced and trained to support standardised delivery of products and services that will meet codes and standards. We must also support the producers of the goods and services to breed home manufacturers and have enough of them to condition inflation.
The impact and the wave that comes from housing mortgage program is a major part of what make a society rich or poor. We are the master of our domain which determines our destiny we make it what we want it to be. Food, shelter, and security are the primary basic need of each one of us. Our country can provide this at a profit let us start talking and planning about the best means to make it available. This is the beginning of our journey, I tell you, because our country will soon be the envy of the world.