How to end the recession in a week

At the risk of offending my good friend Don Ratajczak, I am going to put on my economist hat and offer to solve our economic problems in a seven-day period. News from the housing front is simply depressing and the recovery, such as it was, seems stalled.

Washington obviously needs new ideas, so here goes:

All agree that the real estate industry represents a huge sector of the economy, and when somebody buys a new house it employs hundreds of people all over the U.S. However, people who are worried don’t buy houses, and a large segment of the workforce is either unemployed or worried.

Real estate led us into this recession and it will have to be real estate that leads us out. That’s the way it has worked for the past seven recessions in a row, so what do we need to do?

• On Monday, declare a national moratorium on all residential foreclosures unless the lender has engaged in meaningful attempts at modification and has employed every reasonable strategy to keep the borrower in the house. Also, grant "safe harbor" status to servicers who grant modifications in good faith. That step alone will keep millions in their homes.

• On Tuesday, modify the Garn-St. Germain Act to invalidate "due on sale" clauses used by federally chartered lenders to prevent buyers from taking over payments. This would allow thousands of owners to sell to buyers who are able to make the payments, but unable to meet new and more stringent underwriting criteria. Lenders should still be able to require reasonable credit and income standards, but assumption should be quick and easy, and at no cost.

• On Wednesday, change the tax code to encourage real estate investors. Eliminate all income taxes on profits derived on the sale of any home purchased as a bank-owned foreclosure, then renovated and resold within 12 months to an owner-occupant.

This would cause bank-owned homes to become much more attractive to private investors, who would rush to buy them as soon as they became available. They would then renovate them with private money rather than looking for a government handout. And it would help stabilize neighborhoods by eliminating vacant houses and substituting owner-occupants.

• On Thursday, declare a six-month "federal tax holiday" and simply stand back and watch the economy move into high gear. It is a fact that tax cuts create jobs, and that's what the real estate market needs more than anything else.

• On Friday, take the day off, but notice that the stock market has recovered and every home in America has jumped in value by 10 percent. Everyone will feel more confident, unemployment will decline and the recession will officially be over.

Please share your thoughts with me at money99.com.

John Adams is an author, broadcaster and investor. He answers real estate questions on radio station WGKA-AM (920) every Saturday at noon.