Great article in the New York Times this mornign concerning the mortgage principle reduction quandry. It is a wonder to me that it hasn't happened already, but Lenders/Investors just are not willing...yet. I have said for the past 3 years and continue to believe that this would be the single most advantageous event to stop the housing market decline. Keep people in their homes.
Most homeowners don't want to leave, but they are becoming more and more educated about real estate and how and why the downturn occured. More and more are looking at their homes as part of their portfolios and making the educated decision to sell that stock..they WILL walk away here in California. Why not turn non-performing loans into performing ones?
How about FMV + say 20%..I bet most homeowners that can pay that smaller and more market sensible mortgage would. Short Sales would slow down, market values would stop plummeting and the Lenders would take their write downs earlier..so what? They would, I believe, ultimately lost less money if they took their losses NOW..not after the property is abandoned.
Short Sales in the Palm Springs Valley and elsewhere, will continue unless the Lenders/Investors get together and face reality.
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