A polling statistic widely reported this week indicated that 53% of Americans were very concerned about their ability to make their mortgage or rent payments.  Think about the gravity of that statement:  more than half of all Americans are worried about their ability to make the most fundamental of payments, one that supersedes payments on utility bills, credit cards, and other revolving debt.  Stated another way, the majority of citizens are finding their American Dreams turning into nightmares.

The American economy is driven by consumers, encompassing you, me, and everyone else in the U.S.  If 53% of us are concerned about simply making our mortgage or rent payments, how likely is it that any of this group is going to purchase items that they consider non-essential?  What will that mean for retailers this holiday shopping season?  Most significantly, what does that tell us about the nature of our alleged economic recovery?

Real estate is fundamental to our American economy for both tangible and intangible reasons.  Americans, perhaps more than citizens of other free societies, like to feel a sense of control over their lives and fortunes (and, I’m not speaking of wealth).  And, at the root of that sense of confidence is the perception of security provided the average American by home ownership.  When secure in their own homes, Americans feel unencumbered in making purchases to enhance their lifestyles and in bestowing their generosity on those less fortunate.

For that reason, I believe that the vitality of the American economy and our very way of life are rooted in the stability and growth of home property values.  Absent the stabilization of real estate values, our economy can never fully recover for the average American.

With the staggering numbers of properties either in foreclosure or pre-foreclosure, the outlook for property value stabilization in the next several years is dim – even in states and locales that have not experienced the steep value declines that have been realized in states like Florida, Nevada, Arizona, and California.  With ballooning inventories of available properties, I believe that values will certainly decline into the foreseeable future.

In my estimation, only property value stabilization in the near future can save our economy from double-dipping into another recession or worse.  How, then, can we extricate ourselves from this dire situation?  The answer, I believe, is surprisingly simple: stop the foreclosures!

If I were the President or a member of Congress, I would work to initiate action halting all foreclosures immediately and compel the lenders to negotiate affordable terms with each and every borrower who wants to remain in his or her home.  Some homeowners or investors whose values are far below their mortgage balance will, no doubt, choose to walk away from their properties.  The vast majority of individuals and families will, I believe, opt to remain in their homes if given the opportunity.

Now, before you label my solution as lunacy, consider that I am not advocating reducing the principal of any loan or its respective interest rate.  Under my plan, lenders will ultimately receive every penny they are owed and then some – eliminating the force of arguments that restructuring of these loans will somehow create a fundamental unfairness for those who have paid their mortgages according to their initial terms and conditions.

My suggestion is simply to extend the terms of the mortgages of these troubled borrowers to 40, 50, 60, 100, or more years – whatever it takes to create affordable payments.  By reducing their payments to levels that they can afford, this action will keep these people in their homes, expand their levels of discretionary spending, reduce prospective inventories of properties to be sold, stabilize property values, and lay a solid foundation for an economic recovery unfettered by the prospect of another wave of foreclosures as rates adjust on ARM products with longer adjustment horizons.  Nor is it likely that these extended loans will come to term.  As our economy strengthens and property values again begin to rise, the vast majority of these homeowners will likely refinance or sell their homes.

I am certain that there will be those who will scoff at this idea, who will label it as naïve or overly simplistic.  I suggest it not so much as a finished solution, but as a concept whose details and prospective issues need to be addressed.  Sometimes, the simplest ideas are the best.