Mortgage Crisis Solution

Property equity disparity is a relic of Feudalism. Consider landlords. Landlord is a feudal title. A homeowner makes payments on a mortgage loan and earns equity as principle paid. A homeowner can make improvements, install energy saving devices, and grow a garden to reduce expenses, increase the value of the property and increase equity.

However, a tenant pays rent to a landlord who forwards the rent payments to the mortgage loan holder and earns all the equity. Why? Because landlords are a relic of Feudalism. A business earns no equity in the building where it leases space either. Furthermore, a landlord has no incentive to make capital improvements to a tenant’s property, which is called an externality in feudal economics – a liability that a business does not need to pay, like pollution and its related health care costs.

Since tenants never own any equity, landlords ignore tenant incentives. Without personal gain, a landlord makes no investment even though the savings to tenants and the environment might be substantial. This is an inherent flaw of feudal landlord economics. In Common Sense, Thomas Paine argued that in England the king is law, but in America the law is king. However, Paine overlooked a loophole. The corruption of politicians by capitalist corporations and campaign contributors legalized a feudal economic system.

Our economic system is not free market capitalism, but feudal market capitalism. A free market is open to all options. Let the market decide. But the option to permit tenants to earn equity is omitted by money lenders. The federal government instituted Fannie Mae and Freddie Mac to increase access to home mortgages. Both proved to be disasters, and primary causes of the current home equity meltdown. Neither federal program addressed the primary issue: property equity disparity. The solution is to eliminate feudal landlords and eliminate relics of Feudalism.

To implement property equity parity takes an informed public, a self-organized uprising by tenants, demand side activism to correct the priorities and policies of mortgage lenders, and universal bookkeeping methods to account for equity shares of property owned – based on principle paid by tenants, rather than equity usurped by landlords. Thereafter, business and renter tenants earn equity that can be sold to another party or transferred to other property. The means are feudal economic heresy, but the ends reduce poverty and solidify a middle class and small businesses, much more equitable outcomes than prolonging the disparity and injustice of feudal economics or protecting landlord privileges.

The year 2012 is the international year of cooperatives. Cooperative enterprises are democratic networks. Capitalist corporations and central governments are feudal hierarchies. Credit unions are cooperatives that are ideally suited, on cooperative principles, to adopt this initiative to foster tenant cooperatives and refuse loans to landlords. If you are interested in supporting this cause then transfer all your savings to your community credit union and tell a loan officer that you want to support, form, or join a tenant cooperative to purchase rental housing.