The deepening U.S. mortgage mess in which giant lenders were seizing thousands of homes without following the laws has led to all 50 state attorneys general to put a temporary freeze on foreclosures.
Doe this mean the owners now have free homes? Many people who couldn't make their mortgage payments also couldn't pay their property taxes, fire insurance or home maintenance. They've lived in their homes for free. As local communities couldn't collect those property taxes, they've had to layoff teachers, police and firefighters and cut back on other essential services.
But before you criticize those who have defaulted on their mortgages, property taxes, etc., in many cases these are people who have lost their jobs and are desperately looking for work. Others are suffering from horrific illnesses and no longer have health insurance.
Still others qualified under government relief programs for lower mortgage rates and partial mortgage forgiveness from lenders but often those lenders did not follow-up with them and instead put them in foreclosure.
As a real estate owner, last year I had a long time tenant with two children, who lost her job and was unable to find work. She never told us. Desperate, she packed her things and moved without first notifying us. But she left a note apologizing and explaining her dire circumstances as she moved in with family.
In response, we forgave the money she owed and sent her a note wishing her well, thanking her for having been such a good tenant.
This solution could work for these giant lenders as well, all of whom received massive bailouts and continue to get ultra-cheap money through the government squeezing interest rates to savers to nearly zero. They could hire and train enough people to process all these loans in good faith.
Many troubled homeowners are also far behind in car and credit card payments and will leave. They just want to be treated with respect. For those who could afford their homes if adjustments were made to their mortgages, make those adjustments! It's cheaper and easier than seizing the homes, renovating them and selling them at huge discounts to investors.
There are no free homes. But there are millions of people who need a helping hand and it is good business to give it to them.
Dick
10/19/10 Update: Yesterday, despite the 50 state attorneys general freezing the foreclosures, the Bank of America will continue 102,000 foreclosure proceedings. And there will be more to come. They were joined by GMAC and Citibank never stopped their foreclosures. So despite the enormous documentation mess, it is business as usual for these giant government bailed out banks.
1 comment:
I had NO SYMPATHY for the vast majority of people and their lenders who took and made loans that financially were not viable. Everyone enjoyed the craziness of the bubble and given the truth in lending laws (passed under the Johnson Administration), the information was right in front of everyone signing their loan documents.
When the bubble burst and surprise, the borrowers couldn't pay the no down, negative amortization, teaser rate loan, the lenders were heading towards spectacular crashes. Luckily their lobbyists were hard at work with their former co-workers at the Fed and Treasury and they came up with "too big to fail." It should be noted that those at the top of these now zombie banks made obscene fortunes in salary and bonuses for their stupidity.
Taxpayer money saved the banks that now are foreclosing on their former partner in this financial facade. It is too bad that amnesia came so quickly to the rescued as they don't seem to have any life vests left as they want to get their bad debts off of their books so they can go back to paying huge bonuses.
As a devout capitalist, I believe all should have been wiped out financially. As someone who believes in fairness, this situation sucks and I'm sorry to see only one side of this equation get the downside of poor financial planning.
Post a Comment