As the Mortgage Crisis continues to ripple through the country solutions are being offered up.
Global Insight prepared a report for the U.S. Conference of Mayors projecting a lost of $6.6 billion in tax revenue in 10 states. In the same report lenders were told they need to modify the finance terms of people who could pay for their homes had they not been placed in high risk home loans.
The factors bringing our country to this point can be likened to the layers of an onion. Each layer building upon the next entwining, growing until there is one big stinky mess. It’s been called “the perfect storm”. An over mortgaged, under-qualified America is now looking for relief.
Colorado House Bill HR 3609 is looking to legislate help for bankrupt homeowners. This bill would allow the bankruptcy trustees to rework mortgage terms to benefit the homeowner.
Currently trustees can rework other loans, but they are prevented from touching primary home mortgages. The bill appears to have merit but one wonders how far can one expect the mortgage lenders to bend? When a high risk loan is given to a buyer, it is done so at a higher rate for a reason; profit that is worth the investor taking the risk.
So I ask, if the lender is required by law to renegoiate a note that is currently delinquent, with a borrower who now has bad credit (they are in bankruptcy) how long with these new terms last? How long can a mortgage lender afford to stay in business? By doing so are we postponing the inevitable?
Offering up a “one size fits all” solution just doesn’t work. There are many issues here, none are going to be easy to solve on their own much less all at once.
We have a problem in this country with lack of responsibility. Buying a home, getting a loan, purchasing a car or whatever comes with a responsibility to pay for it….yourself. It’s a promise. A promise should be kept. It’s not a promise to keep as long as you feel like it.
I realize this comes across as sour to those in trouble. Those folks who took out loans and found themselves on the wrong side of a housing down swing. All I can say is this, it won’t last forever.
This market is a market and will adjust, eventually. We in America will always need housing. Owning a home is the American Dream. It always will be.
Right now for some the Dream is more like a nightmare. But nothing is forever. This too will pass.
This One sized bandaid does not fit all.
(If you are a Colorado homeowner in trouble there is help for you. Call the Colorado Foreclosure Hotline 1-877-601-HOPE)
About the Author
Kristal Kraft
Kristal has been helping buyers and sellers in Colorado since 1984. She enjoys sharing her knowledge of the Metro Denver Real Estate market via blogging and in person while driving around the beautiful Rocky Mountain town of Denver! For fun, Kristal enjoys shooting things with a Canon. Visit Denver Photo Blog
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Kristal Kraft
2 Comments
Good call Kris,
As a house wife of 37 years who has mostly kept us on budget, buying what we can afford, not what I’ve been told we can afford, I agree. When I heard that they are trying to pass legislation to solve the problem of buyers taking on more than they can afford,and or the lenders that are lending to them, my first question was, why should We (who live within our means) have to pay or bail out those who don’t live within their means, and when the “government” pays, it’s out of our pockets.
I understand it’s tempting, how many credit card offers do I shred in a month, but when or if you get yourself in trouble you certainly don’t LEARN anything if there is no consequence. And as you get older and learn to look beyond yourself, and at the big picture, you see how harmful this scenario is to our Country as a whole.
So a little common sense, if you take on more than you can afford you might lose it and if you make too many credit offers or loans to poor risks you might go out of business,I agree with you Kris, things will adjust. You are one smart Realtor, not to mention a heck of a friend
Candy ~ Glad you agree with me. Do you remember the cartoon in the Asbury Park Press that had a picture of a cart? Underneath the cart it said, “If everyone wants to ride, who is going to pull?”
That’s what’s happening now. Everyone want to ride.
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[...] BeZaa had some great ideas on this topic.You can read a snippet of the post here.So I ask, if the lender is required by law to renegoiate a note that is currently delinquent, with a borrower who now has bad credit (they are in bankruptcy) how long with these new terms last? How long can a mortgage lender afford to … [...]