Foreclosures, Short Sales or Other Alternatives
The hot new topic is, "Should the banks be writing down principals." Many government officials, banks and investors are all weighing the pros and cons of this alternative. Of course, the bankers and the investors would only proceed with this scenario if it was beneficial to them. However, it appears important for government officials to curb the amount of defaults entering the market. We know there is a direct correlation between loan amount and value of the house which is affecting homeowner defaults.
Others feel that we should stop giving to the banks. With all the spending we have done, they might as well write checks to the homeowners themselves.
This creates fear for all involved such as the following:
· Fear that people would purposely fall behind so that they would qualify
· Need to create more software and personnel to handle all the claims
· More tax payer dollars going to the housing bail out
· Working just to pay our taxes
In Santa Monica, CA and New York there was a program that provided low income housing for people who wanted to purchase a house. They helped with the down payment, and when the house sells they share the profit from the sale. This might be the answer to the problem. It is a way that the investor can write down the loan and then gain when housing prices go up. The investor benefits when the house is sold.
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