Wednesday, October 08, 2008

Let's tell a little bedtime story...

Once upon a time there were 3 people. Cindy owns a house. But Cindy doesn't want to own it anymore because she has 7 others and doesnt need this one. But Cindy doesn't like how much people are offering her for her house.

Well to be fair, Cindy doesn't actually 'own' the house - she has a mortgage on the house - and still owes her other friend, we'll call him Keating, a million dollars.

Well Cindy isnt happy. She wants more money for herself so she can buy more shoes - because you know all about women needing to spend a lot of money on shoes - and she cant afford any shoes because she cant sell her house.

So she talks to her husband John. John comes up with a plan. See - Cindy needs money - and it's not like Keating is very happy with the idea that the house Cindy bought isnt worth what was paid for it. So they talk about having the government buy the houses - which sounds ok - but cindy isnt really going to be able to afford many new shoes that way. So instead they come up with a new plan... the government will buy the mortgage and then resell the house to Cindy at the lower price - with a new mortgage. This is actually a much better deal for Cindy - assuming her friend Keating is willing to refinance her house for $10 million - and allow Cindy to take half that money out of the equity. That way Cindy pockets $5m, the bank walks away with $4.5m, the government reprices the house at 500k and sells it to cindy, and cindy walks away with the other $4.5m. Everyone wins and they all live happily ever after.

The End

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