Real Estate and Mortgage Professionals are usually not too happy when the media chooses to report on the industry, since they feel that the media tends to emphasize the negative news (home prices falling, foreclosures increasing) instead of the more positive news (lower rates, more affordable housing).  While sometimes I wish that we could gag the media , I try not to get too upset over what's reported in the news about the real estate market or worry that the negative press is hurting my business.  I know that the only person who truly has the media in his backpocket just got elected president, so if I want to get the positive news out there to potential consumers or dispel the negative messages, I have to do it myself.  That's part of the reason why I blog.

While we can't expect the media to takeover as a PR representative for the real estate and mortgage industry, we should, however, expect at least a semblance of professional journalism.  This piece Are You an Idiot to Keep Paying Your Mortgage written by Kathleen Pender, ain't it.  The article, from the San Francisco Chronicle, basically reads like a how to guide on avoiding paying your obligations and sticking it to your lender.

Should you keep paying your mortgage?

If you have significant equity in your home, absolutely.

If you don't, it's getting harder to answer that question, especially when our government keeps giving people who owe more than their homes are worth so many reasons not to pay.

The article goes on to quote the campaign fact sheet of the president-elect which states "the real victims in the subprime mortgage crisis are not the lenders, but the millions of borrowers who followed the rules and whose only crime was taking out mortgages that lenders told them they could afford."  I guess if "The One" wrote it, and the reporter quotes it, it has to be true, right?  I mean should we really expect personal responsibility to come into play here?  If the greedy lender told you that you could get approved for a $2000 monthly mortgage payment, yet you only take home $500 per week, how were you supposed to know you wouldn't be able to make the payment?

While the article briefly discusses the other loan modification available from the FHA, it focuses mainly on the Streamlined Modification Program, for which you must be 90 days delinquent to qualify.  The reporter provides this helpful tip:

The streamlined process looks only at income, not assets. If you refinanced your home to buy a Mercedes or own another home, you won't be expected to sell them to pay your mortgage.

Whew!  That's a relief.  Wouldn't want anyone to have to sell the E-class or the shore house to have to pay their mortgage.  But there's more.  Like any good reporter, we have the requisite "expert" quotes and opinions such as:

Peter Schiff, president of Euro Pacific Capital, predicts that many homeowners who have little or no equity will stop paying their mortgage and then reduce their income to get the biggest payment cut possible. They could stop working overtime or, if two spouses work, one could quit. After the modification, they could try to boost their income again.

"This is a once-in-a-lifetime opportunity," Schiff says. "People are going to feel like complete morons if they don't participate. The people getting punished are the ones who never made an irresponsible decision to buy a house they couldn't afford."

Gee, I feel like a moron already.  I am one of those people who didn't make an irresponsible decision and is getting punished by not being able to take advantage of this deal.  But I can at least take solace in the fact that these people are gonna have screwed up credit for like the next  7-10 years , right?

Well um, not really:

Risking your credit score for a lower rate "sounds like a game of chicken on the lending highway," says Craig Watts, a spokesman for Fair Isaac, which markets the FICO credit score.

But then:

A 90-day delinquency will hurt your score, but not as badly as a foreclosure. How many points it takes off depends on other things in your credit file, such as the number and severity of late payments on other accounts.

In the latest version of FICO, which is just being rolled out, "one isolated delinquency will do less damage to your score than it has in the past," Watts says.

Consumers who suffer a severe delinquency can rebuild their scores over time by paying all credit accounts on time and keeping their balances low.

And then the priceless:

"If it was me and I was certain that I could keep my home even after missing a couple payments by working out a deal with the lender, I'd be for keeping the home," Watts says. "Your score will bounce back."

While, I know any competent mortgage professional would never dream of advising someone to stop paying their mortgage so that they may possibly get the loan modified, Ms. Pender's piece pretty much implies that not only should you do it, you'd be an idiot not to.  I look forward to her next responsible piece of reporting, which will probably be entitled "Are you an Idiot to Keep Making Payments on your Lexus?  The Repo Man Can't Find You if He Doesn't Know Where to Look."

Written by Michelle Chamberlain of Above All Financial Services, a Pennsylvania Mortgage Broker.  To learn more about applying for a residential mortgage visit www.aboveallmortgage.com .  For information on Small Business Financing visit www.ezmerchantadvance.com.