It is a question that is being asked around more than one dinner table or gathering of friends these days. When it comes to providing assistance to homeowners who over extended themselves a few years ago it appears that there may be some relief. But what about the homeowners who pay their mortgage on time but have seen the value of their properties plummet due to those who have decided to walk away?
Strangely enough it is a question I've been asked more than once in the last week. In some ways the bailout seems to be in reverse to what it should be. The homeowners who shouldn't have gotten a loan in the first place are going to be given the opportunity to freeze their interest rates or have their mortgage reduced to the current market value but what about the other homeowners who are make their payments? They have also been hit by the economic downturn and the bailout appears to leave them holding the bag.
One of my clients called and asked whether I thought they should stop making their payments so they could qualify for some relief. My answer was NO but I understood their frustration as do millions of other homeowners in the same situation. It made me wonder if anyone else saw this bailout in reverse as well.
Does freezing the interest rate of homeowners falling behind on their payments mean that they can afford their home or does it just stall the foreclosure process for another 6 months?
Is it right to punish those who made a financial commitment and are keeping it?
Should mortgage relief be extend to everyone who bought a home in the last 5 years in declining market areas?
I'd be curious to find out if anyone else is hearing some of the same questions from their clients. Does anyone else think the plan will keep homeowners out of foreclosure by freezing their rate or is a just a delaying tactic that will fail should a full recession be right around the corner?
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