Earlier tonight I was on MSN.com and they had a poll on whether the government should "bail out" homeowners
who are in danger of losing their homes in the current real estate/mortgage banking crises. The over-all tone of the replies that were posted was very negative. Very much a "they made their bed, now let them lie in it" sort of thing.
I commented there and thought that it might be of interest to some here on AR, that I had two problems with people dismissing the idea of a government "bail-out" program for home owners who are in danger of losing their homes out of hand. These two problems are this:
1) While it is true that people entered into these loan programs of their own free will, many of them did so with the expectation that they would be able to refinance before their loan program got to the "adjustable" portion of their loan. With the market dropping in many areas and lenders tightening up their lending criteria, many of these people (who have been making their payments on time) find themselves in a position where they "can't" refinance. Very few people saw this "correction" to the market coming and even fewer of them could have predicted the crises in mortgage lending. I for one knew nothing of the ways that Wall Street was structuring these non-conforming loans into mortgage backed securities and how they were mixing all kinds of different non-conforming loans together to make up a security.
2) The government is the only entity that has the wherewithal to "fix" this problem. Lenders have their hands tied and cannot unilaterally change the terms of mortgages in order to "work" a solution out with the borrowers. It's also the only entity that has the ability to step in and manage the crises across the board. Plus it doesn't have to be a hand-out. A program can be created to where people who participate in it have to qualify for the program.
Over-all, a government program to manage this crises would be the rational course of action to take and would benefit every home owner by stabilizing the markets.
Just my opinion and I'd love to hear yours!
Bob Mitchell
ValueList Real Estate Services, Inc.
P.S. The link to my follow post is http://activerain.com/blogsview/186034/A-Hand-Up-vs
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... another important thing to keep in mind is that this is just the tip of the iceberg when it comes to foreclosures. The need to refi and the dreaded adjustment period is not over.... most lenders didn't start collapsing until 12/06 and sold 2/28 mortgages and 3/27 mortgages until their demise. Do the math, 16 months and counting....... tick tock, tick tock
or was that click, click, boom?