One Size Bandaid Fits All

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)