1103 2012 PeoplesAlly Foundation – where the capitalist’s brain and the socialist’s heart meet

The new slogan above reflects how PeoplesAlly ( http://PeoplesAlly.org ) thinks globally. To act locally, PeoplesAlly currently focuses on helping low income working families in the US move up to the middle class through the new free market based alternative home ownership structure of FARJHO ( http://farjho.com ).

The other good news this month was that PeoplesAlly has been approved by IRS as a 501(c)(3) non-profit organization. All contributions made by donors would be tax deductible. We look forward to a campaign to recruit more members and supporters soon.

What is exciting in the pipeline for PeoplesAlly next is to launch http://WeHomeowners.org. The main mission of WeHomeowners is to help assist homeowners across the country with new ways to obtain monthly cash flows in a free market way so that they would not risk being foreclosed by lenders for not having enough monthly cash flows to cover their monthly mortgage debt services.

Please stay tuned for the new site launch soon.

Filed under: Crowdfunding, Economic Viewpoints, Equity Sharing, FARJHO, Housing, InvestorsAlly, Mortgage, PeoplesAlly, Capitalist's brain, Cash Flow Sharing, Crowdfunding of home equity, Equity Sharing, FARJHO, FARJHO.com, Home room sharing, Home sharing, Housing finance, PeoplesAlly Foundation, shared appreciation, shared equity, Socialist's heart, WeHomeowners.com, WeHomeowners.org

1001 2012 Obama’s HARP, Romney’s housing plan, Bernanke’s QEs or the new equity sharing FARJHO under JOBS Act? – with lyrics from Loca People

It is presidential election season again, so we have started to hear more about the candidates’ economic plans. Nothing attracts more attention from the public than the housing issues. Within the past weeks, we have Romney having revealed his housing plans, Obama having pushed again for his HARP, but  none of them has anything economically new to offer other than using it as another chance to repeat the partisan ideological preaching and the fight over whether government led programs vs. the presumed free market ways to let our country’s housing finance problem heal itself may work better than their political rival’s plan. It seems that they only care more about a simple old fashion plan that appears to work better than the other’s plan rather than supporting an innovative plan that will indeed work but that may incur political risks to introduce.

Disappointed, without getting a satisfactory answer in both of their plans, so I went to the Federal Reserve again. There I found out that Chairman Bernanke and his cohorts were still pumping out nothing but even more and more QEs. All day, all night … All day, all night … All day, all night … Nothing but more QEs to push for more loans, more leveraging and more easier credit, hoping not only to bring us back but to further turbo-charge us to where we had started this whole financial mess from to begin with over a decade ago … I can almost hear Bernanke dancing and chanting at the Fed, Viva la Hipoteca! Viva le Prestamo, Viva los QEs! What the Beep!

So I called up my friend Johnny. I said to him, “Johnny, La gente esta muy loca!”

Well, jokes aside, what we really like to do is to ask those politicians with a real workable housing plan please stand up. For the right, it is easy to just say let the free market heal itself. Free market solutions without the government leadership or competition without rules would indeed simply lead to either a crony capitalism or a ruthless predatory free-for-all anarchy. For the left, once they have replaced the crony capitalism and they’ll easily end up with even worse power hungry crony socialists.

What we need is perhaps not yet another round of old ideological political debate now, but rather some educated rational thinking and technically competent debates of what the new and economically innovative ways may be to own homes without piling up more debts as well as what the new technologically efficient and productivity enhancing ways are to deliver these new economic benefits to the consumers without being misguided and fleeced by unscrupulous financial middlemen yet again. These real stuffs to fix our faulty housing finance system may seem to be what the politicians need to focus on in order to bring the real tangible benefits to our country.

This is the 6th year since I have been researching, publishing and blogging on the various economic benefits of using property equity sharing or cash flow sharing concepts and methods to offer many new alternatives to our current faulty exclusively mortgaged home ownership centric housing finance system. Many of these new findings and creations are available to my personal academic research web site, http://swaprent.com.

More detailed info on the SwapRent original creation process in 2006 is available at https://www.box.com/s/437c60e4d8931365b9e4 and on SwapRent application in the 2009 JHFI (Journal of Housing Finance International) by IUHF (International Union of Housing Finance) paper at https://www.box.com/s/feae725ede7042c53412. For the much simpler FARJHO solution, here again is the link to the FARJHO white paper, https://www.box.com/s/cc0de069ab5c3fd3007e.

Thanks to the democratic power of the Internet, SwapRent and FARJHO have conceptually and academically been gaining momentum and endorsement day by day with a world-wide audience. We are currently preparing to solidify these new innovative ideas and beta launch these new consumer services at the transaction oriented http://farjho.com and a broader social networking portal for home owners, http://wehomeowners.com as our free market based solutions to our country’s housing finance problems. The purpose is perhaps much more mission driven than financial. Since these new services could also be offered on a not-for-profit basis, i.e. through PeoplesAlly Foundation (http://peoplesally.org), we do need many supporters from the crowd to come on board to help us make these new consumer services a reality.

As explained in earlier blog posts, due to the recent breakthrough by a few visionary law makers with their innovative regulatory provisions of crowdfunding and the relaxed marketing rules of private placement funds contained in the JOBS Act, we may finally see the light at the end of the tunnel in bringing these new inventions to life as new free market based consumer services soon.

Viva la Innovation, Viva la JOBS Act, Viva la FARJHO!

(Quoted lyric above from “Loca People” by Sak Noel)

Filed under: Cash Flow Sharing, Crowdfunding, Economic Viewpoints, Equity Sharing, FARJHO, Federal Government, InvestorsAlly, Mortgage, PeoplesAlly, SwapRent, Cash Flow Sharing, Crowdfunding, Crowdfunding of home equity, Equity Sharing, FARJHO, FARJHO.com, HARP, Housing finance, Housing Plan, Obama, PeoplesAlly Foundation, Romney, shared appreciation, shared equity, SwapRent, WeHomeowners.com

Crowdfunding of Home Equity at FARJHO.com – How crowdfunding could help solve our country’s housing finance problems

This blog post first appeared in Huffington Post on 8/7/2012. http://www.huffingtonpost.com/ralph-liu/how-crowdfunding-could-he_b_1752633.html

Ever since the JOBS Act was signed into laws by President Obama on April 5th this year, the enthusiasm on crowdfunding has mushroomed in just about every corner of America. Many people with some technical Internet knowledge would rush in to start a crowdfunding portal to help American create more jobs through helping entrepreneurs raise equity financing. Many more are anxiously waiting to utilize the new found channel to raise money for their own business start-ups from regular investors over the Internet.

At InvestorsAlly’s FARJHO.com, we have coincidentally also been trying to provide the matching services between aspiring home owners and prospective joint property investors to co-own homes through a new innovation home ownership structure called FARJHO (Flexible And Reversible Joint Home Ownership) over the Internet within the past few years.

The concept of connecting consumers directly via Internet used be to called a Peer-to-Peer (P2P) method of matching individual consumers with similar desire to consummate a transaction of a common interest, be it a dating service or a financial transaction. Going back a little bit further to the 90’s, this matching of retail consumers directly through the power of the Internet used be more popularly categorized simply as the Consumer-to-Consumer (C2C) e-commerce. So crowdfunding appears to be nothing more than another jargon as the latest variation in the evolution spectrum of the Consumer Internet service, although technically speaking it is more a Business-to-Consumer (B2C) e-commerce since the relationship seems to migrate from a one-to-one to a one-to-many relationship. The new break-through to suddenly let out the pent-up interests in crowdfunding is really on the regulatory side. Kudos to those visionary law-makers!

As for the coincidental parallel innovation on the housing finance side, FARJHO is a new way to implement the old property equity sharing concept that has been around for more than 30 years, although primarily more popular in the UK. Those older equity sharing methods did have many growing pains and never made it to the mass consumer market. Inventions in social sciences would provide new economic values just as technology inventions do. The distinguishing features of FARJHO as a new business method to implement the equity sharing concept are three-fold:

First, FARJHO allows renter/home occupier and joint property investors to own only one home at a time in order to maintain the sanctity and the freedom of the single family residence ownership. This is in sharp contrast to many community oriented equity sharing methods of Co-ops, Land Trusts, Kibbutz or hippy-ish Commune types of older equity sharing methods.

Second, as a brand new concept, FARJHO introduces and allows only member level debt financing to eliminate the foreclosure possibility which exists with the conventional property level debt financing that are commonly used by a Shared Equity Mortgage (SEM), a Shared Appreciation Mortgage (SAM), a Shared Ownership Mortgage (SOM) or any other existing equity sharing schemes to date. In all those older business methods, the home occupiers could still get foreclosed whenever they lose their monthly income capability. The concept of FARJHO is to move people from a Pool-Borrow-Buy (PBB) method to a Borrow-Pool-Buy (BPB) method in joint home ownership.

Third, FARJHO provides a natural built-in buffer to conventional renting to avoid potential eviction when the tenants temporarily lose their monthly income capability. The equity stake of the renter/co-owner of the FARJHO structure could act as an optional voluntary collateral against missed monthly rent payments and therefore provides property investors with enhanced investment security through less credit risks and at the same time provides the tenants/co-owners with more home occupying stability during the rainy days in their working lives.

Although we at InvestorsAlly have received overwhelming positive response and a very strong market demand from home owners under our various educational test marketing programs conducted in Southern California within the past two years, due to the prior securities laws related regulatory concerns, we have not been able to officially market the FARJHO service freely in a massive scale. Now with the new crowdfunding provisions of the recently passed and signed JOBS Act to be enacted by the SEC by the end of the year, we have accordingly been preparing to position and may finally be able to launch our FARJHO.com as a dedicated crowdfunding portal site as the authoritative marketplace for crowdfunding of home equity, one home at a time, through the new home ownership structure of FARJHO. This will be a giant step towards realizing a stock market for home equities.

The reason why this new regulatory crowdfunding business opportunity development could be made possible to be applied to housing finance is that the proprietary new home ownership structure of FARJHO that we have coincidentally been working on for the past few years basically corporatizes each home in America one home at a time. Since each home will be treated as a business venture via a simple LLC legal structure under FARJHO, the new crowdfunding regulatory provisions could therefore be conveniently applied to housing finance for the first time. The reason why we have adopted the LLC legal structure is that using LLC to hold real estate properties is a tried and true method in commercial properties for many decades already, even though they have been used with an opposite purpose to FARJHO as far as leveraging is concerned.

The portal site will provide free membership to homeowners around the world similar to how Facebook does for individuals with all the social networking capabilities but our homeowner members will have a specific hope of selling their homes, buying another new home in whole or in part, investing a small part of a few other member’s home equities as an investment portfolio or simply obtaining occasional short term financing through selling fractional shared equity of their own homes through the new FARJHO home ownership structure.

There could be many more other free market based new consumer choices made available to solve our country’s current housing finance problems by this new FARJHO service to free people up from the current dominant mortgaged home ownership that often results in foreclosures and hence has created many financial problems and social instability to our economic societies. Furthermore, it may lay the proper free market foundation for further future benefits to grow upon with even more innovations that we could not even foresee at this moment.

For example, the use of property equity sharing as a temporary non-debt based financing alternative for small businesses to obtain funding to created jobs, the use of property equity sharing or cash flow sharing concepts and methods for the governments as a new third alternative economic policy management tool (vs the existing fiscal and monetary policies) to provide stimulus or to slow down an overheated economy, … etc. (more detailed policy tool examples are available in Chapter 6 of the SwapRent application paper at https://www.box.com/s/feae725ede7042c53412 )

FARJHO.com aspires to become the first entrepreneurial venture to bring new housing related economic benefits via crowdfunding to the American consumers under strictly free market principles by harnessing the power of social innovations, Internet technology advancements and the timely regulatory foresights.

A copy of the original FARJHO creation white paper could be downloaded through this following link. https://www.box.com/s/cc0de069ab5c3fd3007e

Filed under: Cash Flow Sharing, Crowdfunding, Economic Viewpoints, Equity Sharing, FARJHO, Housing, InvestorsAlly, Mortgage, PeoplesAlly, SwapRent, Cash Flow Sharing, Crowdfunding, Crowdfunding of home equity, Equity Sharing, FARJHO, FARJHO.com, Housing finance, InvestorsAlly, PeoplesAlly, shared appreciation, shared equity

1003 2011 Let FARJHO and SwapRent bring housing finance from the sleight-of-hands on Wall Street to the common people on Main Street – Food for thoughts for the Occupy Wall Street protesters

The Occupy Wall Street protesters’ movement seems to be gaining steam and momentum but what do they want to accomplish?

How about telling Wall Street to stop meddling with our housing finances? Furthermore, the angry protesters that occupied Wall Street seemed to be only able to focus of what have been stolen but they are definitely out of touch on what is about to be stolen again by the very same thieves while they are risking their lives physically protesting to on Wall Street.

First, the best economic solutions and/or new economic systems could be totally ruined if left in the wrong hands again. We need more people’s active participation and the support of PeoplesAlly Foundation to further our causes of FARJHO and SwapRent for the benefits of the people on Main Street. Let’s work together to keep Wall Street big banks’ dirty fingers off these new democratic solutions.

Second, we will need to prevent another financial heist like those happened in 2008 from happening again. In Russia and other third world countries the oligarchs have to make some special efforts to steal the national assets behind closed doors. It would actually be a lot of hard work for them and perhaps a few investigative journalists would have to be poisoned or murdered along the way. Here in America, they do it right in the open by spinning the media with wrong information and manipulating the public sentiment with political influence. They did it times and again right in front of our eyes and there was not a thing that we, the folks on Main Street could do about it. The case in point is FHFA’s current plan to sell the REOs (foreclosed homes) that they own to privileged private sector firms.

The distrust of the federal government’s housing plans is not unwarranted. Remember when the financial crisis first emerged in 2008 and the federal government came up with their first solution that left many of us flabbergasted? While people are losing homes and jobs left and right everywhere, the first thing they did was to come up with a plan to use tax payer’s money to give more than one thousand dollars to the mortgage servicing firms owned by their crony friends for each of the loan mods that they worked on? (Goldman Sachs used to own a major mortgage servicing firm Litton Loan Servicing and only sold it in June this year after many robo-signing scandals.)

You may also have seen how “housing experts” or securities analysts from the investment banks such as Morgan Stanley etc. keep spinning the story on TV and in the press media that the federal government has no experience in running the renting business as the sole reason why GSEs/FHA should sell their REOs to the private sector firms in bulk at discounted prices. It would be another big feast, if not steal, for their crony friends in Washington DC and on Wall Street again while being empowered by the almost zero cost of fund to build up their war chest, thanks to Bernanke and the Federal Reserve Board. It is like hitting another Super Jackpot again!

Let’s hope the cronies would not get it their way to buy in bulk at deep discount our national assets owned by the GSEs/FHA again. If they get it their way, they would become the new serfdom landlords to millions of working class people on Main Street. It will turn America into an oligarch state without a middle class. Can you imagine United States of America is about to become a nation of renters to a few handful of oligarchs!

The availability of the information of FARJHO and the services to the GSEs/FHA may have a chance to stop these pending thefts if more information is made public and understood properly by people on Main Street on what kind of financial heist is about to happen all over again.

Don’t wait to protest after it has happened again. Protest to stop it from happening at all!

Filed under: Cash Flow Sharing, Economic Viewpoints, Equity Sharing, FARJHO, Federal Government, Housing, InvestorsAlly, PeoplesAlly, REIDeX, SwapRent, Affordable housing, Cash Flow Sharing, Equity Sharing, Fannie Mae, FARJHO, FHA, FHFA, Foreclosed homes, Freddie Mac, GSE, housing affordability, Lease option, Occupy Wall Street, Property management, Rent to own, Renting, REO, RFI, Shared Ownership, SwapRent

0910 2011 Our response to FHFA’s RFI – FARJHO and SwapRent from PeoplesAlly Foundation and InvestorsAlly, Inc. – A letter to the Fed, the Administration, GSEs, HUD, SEC, CFTC, other Agencies and the State Governments

Here below is a recent update letter to many of my academic friends who possess well established expertise in economics, economic history, finance, derivatives, laws, mathematics, housing, housing finance, urban planning, real estate, business studies, public policy and political science in various leading universities around the US and in selected foreign countries. I thank them for the various feedbacks and support through the years.

Transparency in our federal government’s policy making process is always a good thing for our country and for our democratic society. As one public figure recently said, the best way to keep a secret is to do the right thing.

============
Dear AcademicAlly,

How are you?

Here below is the latest development regarding our efforts to help solve our nation’s housing-led economic crisis. As you know I have been in touch with many of the government folks regarding FARJHO and SwapRent on an academic basis within the past few years since 2007. Please feel free to let me know if you would like review some of their earlier feedbacks. Yours and your colleagues’ academic input and critiques on our proposal would be highly appreciated.

We have provided our FARJHO and SwapRent solutions to the FHFA and submitted our response to their August 10th RFI project (see below) from both PeoplesAlly Foundation ( http://www.PeoplesAlly.org ) and InvestorsAlly, Inc. ( http://www.InvestorsAlly.com ). The non-profit will provide the educational services and the counseling of home owners which we have spent tremendous time to build and to create a political voice within the past year. InvestorsAlly will focus on providing the technology platform for the FARJHO matching services at http://www.farjho.com as what it was always set up to do since the inception.

For a thorough understanding of the new FARJHO methodology to own homes one home at a time, here is the link to my draft paper on FARJHO ( http://www.box.net/shared/yfhkjbqre4idf1kgrtc4 ) which is to be published by the housing finance journal HFI in their upcoming September or December issue as a sequel to my earlier article on SwapRent ( http://www.box.net/shared/v24qtqip4hlgff5l1646 ) published in the December 2009 issue.

Please note again the link to a copy of our response is at http://www.box.net/shared/hpfqqajd1aremco716lr . There could be many area that you and your colleagues could help improve this project. Your active participation to further fine tune our proposed methods, the deployment channels and delivery procedures would be very welcome. It is all for saving our country’s economic future. Let’s work as a team.

Let’s hope that these unwise policy decisions made or to be made by our federal government, intentionally or not, will not turn our country into an oligarch state without a middle class soon. Your active participation may help change the course of history. Please feel free to let me know if you have any questions. Thanks.

===============
Date: Sat, 10 Sep 2011 11:54:07 -0700
To: Email addresses suppressed
From: Ralph Liu <ralph.liu@investorsally.com>
Subject: Our response to FHFA’s RFI – FARJHO and SwapRent from PeoplesAlly Foundation and InvestorsAlly, Inc.

Dear Federal Reserve Board Chairman, Regional Presidents, Administration, Treasury, FDIC, HUD, GSEs, SEC, CFTC, Congressional Staff and Other Relevant Agency Officials,

cc. State Governments, State Housing Authorities

How are you? I would like to give you guys an update on the latest developments of our FARJHO and SwapRent efforts.

On August 10th FHFA, the regulator of GSEs issued a RFI asking for ideas from the public on how to deal with their REOs portfolios. Here is the link to their original request. http://www.fhfa.gov/webfiles/22366/RFIFinal081011.pdfrding

We have submitted our public response to FHFA from PeoplesAlly Foundation and InvestorsAlly, Inc. in early September. Here is the link to a copy of our response for your kind review and comments. http://www.box.net/shared/hpfqqajd1aremco716lr

The advantages of our FARJHO based proposal are:

1. It eliminates the need to let privileged private parties have access to and engage in quick short term buy-low-sell-high flipping activities at preferential bulk sale discount prices to profit from the potential privatization of our national assets owned by the GSEs and FHA.

2. It helps avoid the federal government, the elite private equity firms in DC or hedge funds on Wall Street from becoming new long term serfdom landlords to low income working families on Main Street by allowing renters to become partial co-owners of the home properties through FARJHO LLCs.

3. Potential wealth created from a future recovery of the US housing market will be able to be channelled through FARJHO back to small town investors, mom’n’pop’s self-directed IRAs, state, county and local pension funds, church groups, non-profit endowments etc. on Main Street to fix the local government’s pension liabilities and budget deficits by investing on a more level playing field with other elite institutional investors on Wall Street who already have exclusive access to the use of leveraged low cost of funds as a result of the Fed’s loose monetary policies to profit from the potential price appreciation.

4. Through the new Borrow-Pool-Buy (BPB) member level borrowing concept that replaces the old Pool-Borrow-Buy (PBB) property level financing practice in other conventional equity sharing schemes, future foreclosure possibilities could be totally eliminated once and for all in this new FARJHO home ownership structure.

In addition, I would like to take the opportunity to invite your attention again to the applications of SwapRent as a new economic policy management tool that goes beyond its initial objective of creating housing affordability. A successful implementation could provide the governments with a new way of economic stimulus method similar to how governments have been managing the countries’ economic activities by adjusting the interest rate levels at the moment.

Since 30’s and 40’s Keynesian economy and 50’s and 60’s Monetarism could not function well in a technologically very different modern world in 2011 where hot money flows freely and instantaneously across borders, a new economic policy management tool has to be created so that the stimulus money could have “the stickiness effect” and stay in local communities to have the desired economic stimulus objectives of creating local jobs for the domestic economy. That is exactly what a new SwapRent market could deliver.

For an introductory description of how this could work please kindly review Chapter 6 of the SwapRent article published at the December 2009 issue of the Journal of Housing Finance International published by International Union of Housing Finance (IUHF) at http://www.box.net/shared/v24qtqip4hlgff5l1646 . The following two blog posts also explain how this could be done in local communities through championing by local politicians on a free market basis without relying on any handouts from the federal government.

http://peoplesally.wordpress.com/2011/02/19/02202011-it-is-not-keynesian-it-is-not-monetarist-perhaps-we-could-call-it-swaprentism-any-better-suggestions/

http://peoplesally.wordpress.com/2011/08/02/0802-2011-implementation-strategies-of-farjho-and-swaprent-good-economic-stimulus-public-policy-or-cornering-the-real-estate-market-by-investors-for-profits/

All information contained in our proposal to FHFA are non-confidential in nature and therefore are free for public distribution. Please feel free to share with us your thoughts and comments. Thanks.

Ralph Y. Liu
Managing Director
PeoplesAlly Foundation
23 Corporate Plaza Drive, Suite 133
Newport Beach, CA 92660
Tel: 1-888-456-8881 x 888
Fax: 1-888-315-3831
Direct: 1-949-371-9139
peoplesally@gmail.com
http://www.PeoplesAlly.org
http://www.twitter.com/SwapRent
http://SwapRent.com
http://www.linkedin.com/in/ralphyliu

Filed under: Cash Flow Sharing, Economic Viewpoints, Equity Sharing, FARJHO, Federal Government, Housing, InvestorsAlly, PeoplesAlly, REIDeX, Section 8, SwapRent, Affordable housing, Bulk sales at discounted price, Cash Flow Sharing, Equity Sharing, Fannie Mae, FARJHO, FHA, FHFA, Foreclosed homes, Freddie Mac, GSE, housing affordability, Lease option, Oligarch, Property management, Rent to own, Renting, REO, RFI, Serfdom, Shared Ownership, SwapRent, Tenanted serfs

0802 2011 Implementation Strategies of FARJHO and SwapRent – good economic stimulus public policy or cornering the real estate market by investors for profits?

A very obvious winning strategy of implementing either FARJHO and SwapRent alone or together is to simply concentrate the investments and focus on a few selected neighborhoods in the US, perhaps some mid-sized cities in Southern California.

Let’s have a quick review on the economic concepts of the investing dynamics first. Real estate market as an investment asset class is often more about the Beta than the Alpha as compared to investing in the stock markets. Although that sounds a bit academic to many people but what it means is actually very simple. The way the real estate market moves ups and downs depends more in sync with the country’s economy policies made by the government as a whole, even with the consideration of regional economic factors and/or individual homeowner’s specific maintenance and caring of their properties. The residential real estate market in the US normally behave with a much higher correlation to government dictated lending policies than individual home improvements.

On the other hand, individual companies could much easily out perform or under perform the US stock market and behave individually based on their own individual earning power, management merits and demerits, irrespective what the government’s fiscal or monetary policies are.

As a result, whenever there is a lack of prudent and wise governments policies, the entire country’s homeowners in America suffer. The supply and demand factor of the residential real estate market has always been solely determined in the US by the interest rate levels and the degree of the looseness of credit for people to borrow to own homes.

In the past, local governments or free market based private sector investment companies could not alter the local market supply and demand factor since the interest rate levels and home mortgage credit policies have been determined solely at the federal level and by the big banks on Wall Street. In addition, single family houses are much more difficult to manage than apartments as income producing investment properties in the past since people who could rent were usually urged to buy with or without the ability to service the mortgage loans. As a result, renters for single family houses in the suburbs are difficult to find and keep. The arrival of FARJHO and SwapRent have finally found a way to change that situation.

Now through the new FARJHO structure, SwapRent transactions and their secondary markets, local government housing agencies, pension fund managers, free market based private sector investment companies and/or individual investors could finally alter the local property supply and demand factor and drive the prices of the local property markets up (and down if necessary) irrespective of what the federal government’s fiscal, monetary and housing policies are at any given point in time.

The very simple concept for local community economic growth is that the more fresh new money pumped into the local economy the more likely the local economic activities could be revitalized when the money is put in good productive use. The FARJHO structure and SwapRent transactions could make this simple economic concept a reality and make the economic miracles happen in the local communities without having to rely on tax payer’s money or risking a hyper inflation by altering the interest levels further.

First FARJHO could help any new home buyers and joint property investors buy more homes using cash on hands without relying on credit for debt financing and hence create demand for homes and support the local property price level.

Second, on top of the demand created by FARJHO, SwapRent could help distressed homeowners hang on to their homes and hence remove the selling pressure in the local property markets. In addition, as also explained before, SwapRent could also help speculators buy more properties by sharing partial appreciation with other free market investors and hence increase even more buying demand for homes. Furthermore, SwapRent could also be used to finance local small business investments by entrepreneurs who are property owners and hence create more jobs. Even rich home owners who do not need the cash could also take advantage of the free market based SwapRent program and hence increase dispensable income and create higher consumption powers in the local communities. These were all fully explained in previous blog posts.

http://swaprent.com/blog/2011/02/19/02202011-it-is-not-keynesian-it-is-not-monetarist-perhaps-we-could-call-it-swaprentism-any-better-suggestions/

http://swaprent.com/blog/2009/12/06/12062009-how-small-business-owners-could-use-swaprent-transactions-to-create-jobs-at-grassroots-level/

The main reason why the FARJHO structures, SwapRent contracts and the associated secondary markets could work much better in bringing back the local economic prosperity than the conventional ways of property ownership is that they could attract much more fresh new investors’ money through the ease, the flexibility and the reversibility features with which the real estate investors could manage their investments much better, faster and cheaper. FARJHO and SwapRent in a sense will make the previously “un-investable” single family houses an “investable” new asset class for institutional investors around the world.

As some free market based investors are currently comprehensive about the lack of obvious immediate appreciation potential for the US residential real estate markets due to the current unhealthy government sponsored economic policies, aspiring home owners, local government agencies and free market based investors could indeed create by themselves the demand for properties in the local market through FARJHO and SwapRent. When the more fresh new money has been poured into the local economy, the more likely the property value would have been driven up, the more free markets investors would be further drawn to investing in the local markets and the more aspiring home owners from neighboring communities would also choose to relocate to these local communities to own homes. Creating the local property appreciation and economic prosperity in a confined geographical area could indeed become a self-fulfilling prophecy.

The key concept here is that smarter investors would most likely want to focus all their investments in a few selected neighborhoods with those wise local government officials who want to help facilitate these investment and economic revitalization processes to attract fresh new money so that there would be enough gun powder concentrated on these selected area to get the bang on the buck to artificially create the necessary debt-free property appreciation. With the local property value appreciation, all the current local government deficits, local economic weakness, local resident’s joblessness and the associated social problems could all be eliminated in one fell swoop.

In a sense, maneuvering these property price dynamics could be interpreted as cornering the market for illicit profit by a few individuals to benefit themselves. However if the end results are to benefit not the privileged few but the majority of the home owners in these local communities and the local governments, then cornering markets could indeed be euphemized and re-termed “economic stimulus” to bring back local economic prosperity instead.

In reality, cornering the markets of stocks and bonds was exactly what our federal government and the Federal Reserve Board have successfully tried to do in order to make the Wall Street folks richer and the big businesses awash with cash in recent years with their wasteful fiscal policies and unconventional monetary policies that have built up our country’s uncontrollable national deficits. Since the bubble building techniques that they have employed were based on money they did not have, those bubbles are doomed to burst some time down the road. Perhaps they had hoped for that there would be enough bread crumbs to fall to Main Street for people there to survive but that did not happen and of course would not happen.

What they had failed to find a solution for is a viable way to reinstall the debt-free or less debt dependent property-based wealth in local communities and to revitalize the economic prosperity on Main Street throughout the country to make the majority American people rich again. FARJHO and SwapRent were designed to accomplish just that.

If the incumbent Administration officials could not understand and handle this, certainly the new generations of aspiring politicians should take heed of it before it is too late.

Filed under: Cash Flow Sharing, Economic Viewpoints, Equity Sharing, FARJHO, Housing, InvestorsAlly, PeoplesAlly, REIDeX, SwapRent, Cash Flow Sharing, Cornering the market, Economic prosperity, economic stimulus, Equity Sharing, FARJHO, SwapRent

02/20/2011 The advantages of Cash Flow Sharing vs. Equity Sharing in stimulating our national economy

There have recently been growing number of people who suddenly realized that the simple “equity sharing”, “shared appreciation” or “shared ownership” concept of owning a real estate property could be a viable solution to our country’s mortgage lending or housing finance mess.

Few have had the “Eureka moments” yet about the fact that these simple economic concepts could be modified to create a new economic stimulus program to revive the economic prosperity of our country.

The learning process has been kind of long and the progress has been slow. We need much more people who have the media power or the access to op-eds at leading newspapers to endorse these simple ideas.

The disconnection of moving these shared appreciation related concepts from rescuing the housing finance crisis to further using them as economic policy management tools is due to the lack of the awareness of new innovations already available of some newer concepts and more importantly, newer improved “methodologies” to make implementing these “Shared Appreciation” goals feasible and practical.

That is where the newly invented “Cash Flow Sharing” concept and method come in and that was also exactly one of the key rationales behind the creation of the SwapRent(SM) contract back in 2006.

For more details about the SwapRent(SM) transactions, please visit the SwapRent.com home page again to have a more systematic way to the understanding of these new concepts and methods.

I would like to emphasize only one point here. As compared to the “Shared Equity” method where cash recipients could simply squander way to the new found up-front cash, “Shared Cash Flows” would allow Adam Smith’s “Invisible Hand”, not the capital providers, to have a better control on how the SwapRent(SM) cash flow recipients would utilize these new cash flows to invest more in local small businesses and to create more local jobs under free market based principles.

This is exactly what our country needs right now and it should always be the goal of any economic stimulus programs conducted by the governments.

Filed under: Cash Flow Sharing, Economic Viewpoints, REIDeX, SwapRent, Cash Flow Sharing, SwapRent