R T O America
RTO's -Resellable Tax Options
The Answer to the Economic Crisis
(Why RTO's!, Why Derivatives!, and Why not CDS!-Credit Default Swaps)
www.RTOAmerica.com
(This Website is not finished yet but is Updated Daily)
Contact: Mark McKellar,5211 Summerhill Manor Lane, Katy, Tx, 77494
Phone: 832-295-4815
Cell/Text: 832-785-9288
Watch what Fr President Bill Clinton has to say about how to fix the Economy!
Hi, I’m Mark McKellar, a Real Estate Broker, Real Estate Appraiser, and Fr Mortgage Broker. If you’re like me you’ve watched as Congress and 2 Administrations have struggled to solve the Economic Crisis we’re in. Week after week, Month after month, Congress and the Administration have thrown program after program at the economy in hopes of fixing it. But the economy is getting worse and worse - there is talk that the economy is "Double Dipping" or that we are already in the early stages of a "Depression". And now Congress and the Administration seem to have thrown in the towel and are off running for reelection while the economy gets worse and worse and worse. Kind of like the Titanic going down! “It’s going down and we can’t do anything about it” is what Congress and the Administration think! "So let’s go campaign they say!" As you read further keep in mind that this is a complex problem and not easy to get a grip on or it would have been fixed by now
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This website is not about blame for the Economic Crisis; because there is plenty of blame to go around. It’s also not about Partisan Politics. We’re not blaming one political group over another. But this website is about educating and exploring a new way of looking at the economic crisis and how to solve it because more and more people everyday are losing their jobs and are being foreclosed on and something has to change before the whole ship goes down.
Don't count on Congress or the Administration to do anything for at least the next 2+ yrs. Why?
Because all the Politicians are out running for office- they don't want to do anything before the next election; then you and I will have to wait another 6 to 7 mos after the elections to get anything done. Congress and the Administration still get their paychecks no matter what happens in the economy, so why should they be in any rush? They're just worried about being reelected. If we wait on Congress and the Administration until after the election, by that time we'll be lucky if most of the country is not in bankruptcy, unemployed, and on the food lines. If if we wait the 2 yrs for Congress and the Administration, who say anything that they propose will work. After all haven't they had years already and nothing has worked so far!
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But you and I can do something about it Now! We as American's can Lobby the Administration and Congressman - Democrats, Republican, Independents - to pass RTO Legislation NOW! We don't have to wait another 2 yrs before anything is done. We can do it today. We make it known to the Administration and Congress, that we the voting public are not voting them back in office unless they pass RTO Legislation NOW! not after the election! but NOW! Within 3 to 6 mos of passage of RTO Legislation, real Jobs will come back, people can borrow money and get loans Again! Housing will Restart, the Foreclosure Mess will be gone, Peoples homes will be saved, massive amounts of Private(not government) Stimulus Money will flood into the Markets, the economy will began to healing itself! You and I can make a difference Today! We have already waited years for Congress and the Administration to fix the problem. They haven't fixed it! After all they're still getting their paychecks! It's our turn to fix the economy and fix it NOW!
So if you're tired of the Economic Mess, tired of Massive Unemployment, tired of the Foreclosure Mess, tired of Housing being shut down, tired of not being able to get a loan, tired of the food lines, tired of watching your 401K disappear, then Join Us! and help Us lobby Congress to pass RTO Legislation and bring back America Now! In a few minutes I will tell you how You can Help!
I believe I have an in-depth understanding of the economic crisis and how to solve it. I have a lot of experience at this and have a better understanding of the situation than most people. Below I have put a "Quick Overview" section that is a brief overview of how RTO's work and how RTO's can solve the current economic crisis we find ourselves in. Read on and see if what I’m proposing is the answers to solving the Economic Crisis, getting rid of the Foreclosure mess, and putting American’s back to work again. The Number One issue is YOU HAVE TO RESTART HOUSING. HOUSING IS THE ONLY 800 LBS GORILLA THAT CAN PULL THE ECONOMY OUT OF THIS MESS AND DO IT IMMEDIATELY!!!
There is Hope and a Solution to this Crisis! As you read on keep in mind the term “Resellable Stock Options or RTO’s” for short, because RTO’s are "The Answer" to fixing the Economy IMMEDIATELY!, Restarting Housing IMMEDIATELY!, Pumping mass amounts of Private Stimulus into the Economy IMMEDIATELY!, Getting Rid of the Foreclosure Mess IMMEDIATELY!, and bringing Real Jobs back IMMEDIATELY! in 3 to 6 months and putting Americans back to work IMMEDIATELY! HELLO!. But what is an RTO - Resellable Tax Option?”
Quick Overview
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RTO - Resellable Tax Options
The Basics
What are RTO's and How do they work?
So what is an RTO - Resellable Tax Options? An RTO is like a Security, which can be traded on the open market just like any stock. The holder of the RTO is able to hold on to the RTO or sell it to anyone or any Company that wants to buy it.
Think about Derivatives and how they are traded in the market to hedge Investor's investments against losses. RTO's are similar to a Derivative in that RTO's hedge against losses in the Real Estate Market and RTO's trade in the Market Place, but an RTO is not a Derivative! RTO's are not a CDS! - Credit Default Swap either - in my detailed plan I explain the differences between RTO's, Derivatives, and CDS. But for now just remember than an RTO is similar to a Derivative in that it hedges Investor's against losses and can be traded in the Market Place. RTO due so much more than Derivatives and are much more versatile and stable than Derivatives. And the Great Thing with RTO's is there is No Risk! with RTO's!
Next Question - How is an RTO Created? The RTO is created anytime a Financial Institution such as a Bank, Mortgage Companies, Fannie Mae, Freddie Mac, Hard Money Lender, etc takes a Loss on a Real Estate/Mortgage Loan. In the current economy you would want to make RTO's retroactive for past losses to a certain extent. The amount of the Loss would now be considered an RTO - a tradable Security, like a Stock Share, that could be traded on the open market. The amount of the Loss would be Pre-tax Loss amount. So basically, the Financial Institution's Loss would now be convert to an RTO Security, like a Stock Share, that they can sell on the open market. Let's look at an example of this!
To begin with let's imagine you're a Bank and you lent the Jones Family a $100,000 for a mortgage on their home. Now the Jones Family is in trouble because of the economy and their house is going into Foreclosure. Now your Bank is going to lose $30,000 if the Jones Home is foreclosed on. Right now the Bank just has to write the $30,000 off and move on to the next guy. The problem is that Banks can only do this so many times before the Bank goes out of business. This is a Big problems and it is happening all over the place and it ripples thru the economy. This is why many of the banks have and are going out of business!
Now with an RTO the Financial Institution could take the $30,000 loss and convert it into a $30,000 RTO security that can be sold to any willing buyer on the open market. Now the Financial Institution sells the RTO to a buyer and recovers it's $30,000 and instead of "Booking a Loss" of $30,000, the Financial Institution would now "Book a Gain" of $30,000 pre-tax.
Now what would the buyer do with the RTO once they buy the RTO on the open market? The buyer would now be able to take a $30,000 Dollar for Dollar tax write off on their taxes for the $30,000 it just paid for the RTO.
I know next question "Why would anyone want to pay to buy an RTO for $30,000 so that they can now take a $30,000 dollar for dollar tax write-off? I'll get to that in a minute, but just keep in mind what RTO's are.
Now as I mention above, we as a Nation are faced with some pretty bad economic conditions
including Massive Foreclosures, Massive Debt, Massive Unemployment, and a severely depressed Housing Market.
Now the Big Questions are why would anyone want to buy an RTO and how are RTO's going to solve these economic problems - and remember as I said above, the Key to pulling the economy out of this crisis is to "Restart" Housing - Housing is the only 800 lb Gorilla that can pull the economy out of this crisis!
Now in the example above the Financial Institution had a loss from a Real Estate/Mortgage Loan of $ 30,000, and they converted the loss to an RTO security and resold it on the open market for $30,000 and now the buyer of the RTO security can take a $30,000 dollar for dollar tax write off on their taxes. A lot of people probably wouldn't want to buy that! Now let's suppose the buyer could take a $60,000 tax write of instead of a $30,000 tax write off. WHOOOW!!!! Now do you think you would have buyers lined up all day long to buy RTO's! I think so!
Now in the above example we used a 1:2(30,000:60,000) ratio for the amount of the RTO. This ratio is not set in stone and the Ratio would be set by Congress and the law they passed that enacts RTO's. In the above example if the Ratio was 1:1.5, then the loss would be $30,000 and the amount of the write off would be 45,000 and not 60,000.
We know what an RTO is! It's a security that the Originator - namely the Financial Institution - can resell on the open market to a buyer. The buyer can resell the RTO to anyone else they want to and at a higher price then what they paid for it or they can take the dollar for dollar tax write off on their taxes. If the Buyer choose to resell the RTO to another buyer they can, but the amount of the Dollar-for-Dollar Tax write-off can never go over the face value of the RTO when it was created.
So let's say a $60,000 RTO is created because the Bank took a $30,000 loss on a Mortgage Loan. The Bank now sells the RTO on the open Market and let's say the Bank is going to incurred cost in trying to sell the RTO on the open market. And let's say the cost of selling the RTO is 10%. Now the Bank, the originator of the RTO would sell the RTO on the open market for $33,000(the amount of the lost $30,000 plus cost to sell the RTO in the market place 3,000(10% x 30,000))= $33,000, with the amount of the RTO Tax write-off being $60,000 to the purchaser.
Now the Bank, the originator of the RTO, is limited to the amount they can sell the RTO to only the loss($30,000) plus the selling cost(10% x 30,000 = 3,000) for a total amount of #33,000. Now the Reseller, the person or Corporation that bought the RTO can resell for any amount they want to, but no matter how many times the RTO is resold in the market place the amount of the Tax write-off always remains at $60,000 for this RTO. If an RTO for $40,000 was created because of a $20,000 loss, the amount of the Tax write-off would always be $40,000 no matter how many times it is resold in the open market place. So the Originator is limited to the amount they can sell the RTO for, but any Reseller of the RTO after the initial purchase is not limited to what they can resell the RTO for, but the Tax write-off of the RTO always remains the same as when the RTO was created. Also the Tax write-off on the RTO can only be written off one, after that the RTO is no longer valid.
Now look what just happen! Corporate America and other Buyers just reach into their "Piggy Banks" where they have been hoarding their money and now they are pumping money into the economy on a "Mass Scale". This is not Government Stimulus, this is Private America stimulating the economy now! Financial Institutions who were on the brink of bankruptcy are now solvent again and can lend money again. Hello! - in my detailed plan I explain how to make RTO's available to everyone! how all Americans can get in on this!
Look what's happening now! The RTO's are blowing the debt out of the economy and the housing market! The Economy is recovering at a rapid rate! This is what is needed!
RTO's are like a "Release Value" on a pressure cooker to blow the steam out of the pressure cooker or in this case the debt out of the US Economy, when it over heats! If you don't blow out the debt the economy will continue to crash like it is Now! In this case, the economy and the housing Market are exploding and are being destroy. The RTO's are the "Release Value" to blow the debt out of the economy and the housing market out. The Economy is now being "ReInflated" by the RTO's!
Ok what about all the people in Foreclosure - How do you solve the "Foreclosure Problem"? Simple! With RTO's! Many neighborhoods are "Upside Down". What this means is that the Houses in many neighborhoods are not worth what the homeowner owns on the loan. The homeowner is stuck because the homeowner can't sale their houses. People are desperate to Refinance or Sale their houses and they can't. So what do you do? The government starts to order loan modification on Homes so people can stay in their houses. The amount of the loss the lender takes from modifying the loans can now be converted to RTO's that the lender can sale on the open market to recoup their losses. Now the lender has a gain and not a loss. There are several behind the scenes Loan Modification Programs out in the Market Places right now that are not getting the job done. RTO's would solve this problem.
Next question - How do you restart housing? You guessed it! RTO's! Remember housing is the only 800 lb Gorilla that can restart the economy! The BIG PROBLEM right now there is a "Credit Crunch" and the banks are not making a lot of loans to people. And if you can't borrow money to buy a house then it shuts down the Housing Market. And when the Housing Market shouts down it ripples thru the economy and effects Realtors, Financial Institutions, Appraiser, Home Building Supplies, etc. - the list goes on and on! The banks are afraid that any loans they make right now might go bad. Any they don't want any more bad loans or they might go under. Can't say I blame them!
Congress and the Government pretty much bailed out the Auto Industry but it seems they have done everything they can do to shut down the Housing Industry and over regulated it. The Housing Industry directly and indirectly employs a lot of people in this country. You restart Housing and it will start the wheels rolling to put a massive amount of people back to work plus restart all those Industries that directly and indirectly effected the Housing Industry.
You Restart Housing by backing every new Mortgage loan with an "RTO Guarantee". What this means is for any new Mortgage loans written for housing, the lender it guaranteed that if the loan goes bad that the lender can convert the loss to an RTO. The "RTO Guarantee" on new Mortgage loans should be for at least the next 5yrs and maybe longer depending on how the economy is doing
On top of backing every new loan with the "RTO Guarantee" the banks must lower the credit requirements for borrower to get a Mortgage Loan. With the "RTO Guarantee" the banks will have no problem lowering their credit requirements for people wanting mortgages. The banks knows they will get their money back it the loan goes bad. Many people's credit is much poorer now than a few years ago. IF YOUR GOING TO RESTART HOUSING THIS HAS TO BE DONE. There are 2 things that people usually pay if they can - the house payment and the car note!
You have to remember the economy is severely depressed right now and has been drained of it capital and is loaded with debt. You have to "Re-Inflate" the economy and get rid of the debt if the economy is to recover and recover quickly. The economy is like the Wright Brothers trying to fly their 1st plane. The plane when up and then down and then up and then down. Same thing with the economy, it keeps trying to get up but keeps getting knocked back down. With RTO's it will allow the economy to get up and stay up and Recover.
"Why RTO's!, Why Derivatives!, and Why not CDS!-Credit Default Swaps"
To answer the above question we need to understand "Credit Default Swaps"(CDS) and
where they came from. In 1994, J.P. Morgan & Co. is largely credited with creating the modern day CDS's - Credit Defaul Swaps. By the mid-'90s, JPMorgan bankers were trying to get their hands around the question "how do you minimize or hedge your risk when you loan money to someone? JPMorgan's books were filled with tens of billions of dollars of loans to corporations and others. By federal law JP Morgan had to keep large amounts of capital in reserve in case any of the loans went bad. So JP Morgan created the Modern day "CDS's-"Credit Default Swap's"-to protect itself from bad loans and free up capital. JP Morgan now transferred it's "Bad Loan Risk" off of its books and also lowered it's Capital Reserve requirements for loans. Talk about a "Slide of the Hand Trick"!
So How do CDS's work? CDS's are like Insurance policy in the sense that the buyer of the CDS pays a premium every month to the seller/guarantor of CDS, in exchange for the Seller guaranteeing that it their loan goes bad, then the Seller pays the Buyer for the value of the CDS. For example, let's suppose that JP Morgan loans IBM a $1,000. IBM pays JP Morgan a $10 on the loan. Now JP Morgan goes to AIG -at one time a big dealer in CDS's- and purchases a CDS on the loan it made to IBM. JP Morgan agees to give AIG $1 every month out of the $10 it receives from IBM. If the loan goes bad than AIG will pay JP Morgan for the loan, thus not having worry about taking a loss should the loan go bad.
Warren Buffet calls CDS's "Financial Weapons of Mass Destruction"! And he's Right! The problem here is that on a small time basis if 1 or 2 loans out of say 100 loans go bad this concept might work. But if you have the kind of number of loans going bad that has happen in recent years, these loses can snow ball out of control and crash the CDS's Industry and the Economy. With little if any, to no government regulations, the CDS's become a real "House of Cards". One card falls down and they all fall down and crash the Financial Markets. This is what has and is happening in the Mortgage Housing Markets. Banks are taking huge hits and having to file for bankruptcy because of Mortgage Loans. Fannie Mae, Freddie Mac, HUD, etc., are all taking hits also and the Government is having to bail them out also. The Government decides which Companies are "too big to fail" and bails out who they choose to. AIG never expected the number of loans to go bad that did and there "House of Cards" fell in. The US Government has bailed AIG out. Lehman Brothers was another big dealer in CDS's. The Government chose not to bail Lehman Brothers out. Now when you start comingling and weaving CDS's thru out the Financial Institutions in the United States Financial Markets and the World Financial Markets you can see what happens. Everyone is dependent on the other guy and if the other guy crashes it's going to affect your and possibly crash your Company. This is why the Government had to step in with "Tarp Money"-Troubled Asset Relief Program- to save the US Financial Markets that could have put the United States in a Depression; let alone the Recession we have been in. The Government is also involve in other programs to help fix the economy such as QE- Quantitative Easing. Trap's aim was to fix the "Credit Crisis" where as QE is amimed to promote job growth. In my detailed plan, I go into "Trap" and "QE" and other programs.
If you study recent history the Real Estate Market always seem to crash every 10yrs or so, give or take a year or so and they crash of different reasons. The Financial Institution know they crash and are always looking for ways to hedge their risks to reduce their losses when they do crash. Using Tax Policy to try and make a correction in the Real Estate Market to straight out
economy is not a new concept. Its been used before very successfully in pass market crashes. In my detailed plan I discuss the recent Real Estate Crashes and what caused them and how they were fixed.
So now we understand why CDS's are a bad idea for hedging risk of loans. A better solution that gaurantees loans is RTO's - Resellable Stock Options! RTO's are "Risk Free"! CDS's are not "Risk Free"! There loaded with risk and thats why were in the current economic mess were in!
------ More to Come! Stay Tuned! ------------
---In my detailed plan I layout the complete plan on how to enact RTO's and answer your fine details questions.---
------ More to Come! Stay Tuned! ------------
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