The New Business of America - How it Works


How it Works

One of the biggest problems banks have in recasting mortgage loans is the accounting loss they will take from allowing a borrower to

repay a loan at less than a full amount.  If this hurdle can be overcome, the banks will be more likely to participate.

The New Business of America program works as follows:

A borrower who is in foreclosure, or at risk of foreclosure, who can afford to keep his house if his mortgage payments were reduced, approaches the bank for assistance. The bank agrees to reduce the borrower’s mortgage payment and mortgage amount to a level that is affordable. For instance,the bank might agree to a $75,000 reduction, reducing a $275,000 mortgage to $200,000, with a corresponding reduction in payment of approximately $330 per month.

In exchange for reducing the mortgage amount by $75,000, the bank receives a $75,000 payment from the Federal

Mortgage Recovery Funds.This $75,000 payment comes with some conditions attached.

The bank is able to use 100% of this money, $75,000 in this case, must be invested by the bank into a fund managed by a quality nonprofit organization (the cd.mac) which will be used to create affordable housing and jobs.  The money becomes an invested asset for the bank. From the accounting perspective, the bank is able to take the entire $75,000. As an asset on its books, removing the problem of recognizing an accounting loss.


This program would apply equally to mortgage lenders holding first or second mortgages on a property, and should offer the true incentives for second

mortgage holders to be willing to work to prevent foreclosure.  Unlike in the existing programs, the second mortgage holder will not have to recognize anaccounting loss when reducing the mortgage amount as they will have received payment from the Federal Mortgage Recovery Fund.

This effectively replaces the process of just giving the banks the money, and replaces it with a process that gives them the money, but

directs them to reinvest it into the community in the areas of greatest need.


The New Business of America

The “New Business of America ” outlined within, combines the knowledge, skills, experience, the manpower and money power of Main Street

with the financial andpolitical power of local, State and Federal government needed to rebuild the business of America.

The proposed program has three key elements:

      The CD-MAC foreclosure prevention initiative will accomplish several goals

      Will help stabilize the housing industry.

      Restore confidence in the financial strength of the American economy.

      Provide the investment capital for new business opportunity throughout America.


      Typically, the American business model is based on profitability only.  This does not consider job creation as it first priority.

      The New Business of America plan is designed to put profit and job creation on the same level.  It accomplishes this goal

      by combining the financial strength of working class America with the ability to fund a hybrid structure of investor/employee

      owned business opportunities.


      This fund will create opportunities which will allow for substantial savings related to housing for today’s working class and

      tomorrows retirees along with fair rates of return for its investor/members based on investment value as opposed to market value.


      CDMAC is a US 501-C3 Non – Profit Corporation Robert E. Minichielli Director 781-831-5764

      Community Development Mortgage Alliance Corporation