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IS HOME LOAN MODIFICATION MORAL?

By
Real Estate Broker/Owner with Home Resource Realty -HRR MD, DC and VA

This is a very difficult topic to write about. First - What is Home Loan Modification? This is the act of helping the helpless and sincere Home Owners who have hardship to reduce the monthly payments on their home. The hardship could be because of job loss due to the economy or because of the death of a spouse who was on the original loan. Hardship can take several shape.  Then, is it moral to apply for Loan Modification?  On one side, if a family is sincere and needed the help involved, it is just and right so to do.

Where fraud creeps in and people take advantage of situation is what becomes morally wrong. I will stand in the position of the Mortgage holder. Then I will be afraid to justify the mortgage you took five years ago and I the mortgage bank is servicing the loan. You now want me to reduce the mortgage. Who will be responsible for the difference? How do l write off my loss. Suppose I have to deal with tens of thousand people, where and what type of accounting is this? I begin to look at the morality of the situation now as a mortgage holder. Do l have a choice? Yes, I can refuse the modification and the owner will default and l will try to foreclose. What if my foreclosure cost me more money. Then, it may be well worth it to modify the loan and prolong the amortization of the payments.

However, if the modification is to help a great number of people who lost their jobs but  struggling to replace the jobs lost. Or if the spouse suddenly died and they are left with one income. Or if a whole community or county suddenly are now upside down in the value of their home and all new homes been built are priced below the older homes. Then it is moral to modify the the mortgage in that community and County.

Modifying the Mortgage will bring Stability to the community and the County. Home owners will stay in their homes. Price of home will become Stable and the County will be able to collect the Real Estate Tax. Families will not be disrupted and scattered all over to find new homes in apartments. The Mortgage Banks will be faced with little or no foreclosure. The economy will bounce back. Life will begin to improve. Loan Modification has its two faces, it could be morally right and morally wrong. What do you think?

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Cherry Wings Realty
Cherry Wings Realty - Traverse City, MI
Your Traverse City Michigan Realtor

I would much rather see loan modifications in our industry than short sales.  At least the values stay where they should be.  Short sales are destroying the very fiber of the stability of our industry and our home values.

Apr 27, 2010 09:56 PM
Lenn Harley
Lenn Harley, Homefinders.com, MD & VA Homes and Real Estate - Leesburg, VA
Real Estate Broker - Virginia & Maryland

I think that, no matter how many times I look, I cannot find a "morals clause" in a Universal Loan Application, a Contract of Sale, a Deed, a Deed of Trust or a Note.

 

 

Apr 27, 2010 10:08 PM
Tom Priester
Paradise Sharks - Jupiter, FL
Paradise Sharks

I would rather ........  well I just do not know!

Apr 27, 2010 10:31 PM
Fernando Herboso - Associate Broker MD, & VA
Maxus Realty Group of Samson Properties - Clarksburg, MD
301-246-0001 Serving Maryland, DC and Northern VA

I saw that morals were running high at the Hill yesterday when the bankers testified to the committee

Apr 27, 2010 10:54 PM
Deborah Byron Leffler BzyBee Real Estate Lady!
Keller Williams Realty Boise - Nampa, ID

I think there is a place and a time for a loan modification....at least we are keeping people in homes...they are goign to pay a price eventually....usually their credit is destroyed...and that in and of it self is a punishment...but I agree with Christine...short sales and REO's are lowering property values so very much....it is hurting everyone when  person loses a house!!!

Apr 28, 2010 12:19 AM