I think we are living in interesting times... I have mentioned previously this thought in other forums, typing away for anybody who would listen for the last year; the financial markets had a fairly simple, model, already in place and in use (VA), to bring to a screeching halt this financial crisis "nonsense." My very simplistic and naive approach was (please note past tense) to have the mortgage note servicer companies provide the service they were paid for: Call the struggling client. My thinking was to take the straight forward approach and ask these basic questions to the home owner:
#1, Why are you currently behind on your mortgage? The question determines if there was some catastrophic one time event that set the homeowner back, or did the client feel that skipping a payment was just the in thing to do.
#2 Do you want to keep the house? This question is one of those do or die questions, and the answer either continues the foreclosure/deed in lieu thereof/short sale process or keeps the restructure questions moving.
#3 Can you afford the payments? No really, can you afford the payments?
If the answers to these questions made sense, the cheapest (foreclosures are expensive!) short term answer to avoid having all these problem loans would be to take the past due payments, with interest accrued and place them on the back of the loan, effectively resetting the loan. Poof, problems fixed. Maybe add an interest freeze for flavor… It sounds very simple (and is in fact very over simplified).
But if the Fed can wave a magic club and say to privately owned companies “Freddie and Fannie, you are no more!” than this much more subtle approach should have been almost as easy, much less expensive and all around better for the little people. Shareholders would still be holding something of value and home owners would not have lost their homes in record setting numbers.
Alas, the Fed and the Bush Administration never returned my calls. On the flip side, they did not send anyone to come visit me…
Interestingly enough the end of the non conforming loans are coming up, mortgages resetting (interest rate probably going up) this next year. So the majority of the “crisis” is over. Just in time to catch the end of the crisis (the horse really is out of the barn) our current elected government has passed a whopper, 700 extra large to help our CEO’s etc. through these struggling times. Unfortunately my name was not on the accounts payable list.
We can’t really point fingers at any one political party, a particular law or bill passed, excessive compensation packages, or even the price of oil. But all of these and more, coupled with a healthy dose of greed and suddenly, you, me and the neighbors down the road have an additional tax burden. And frankly most of us taxpayers really don’t know the ins and outs of any of these “bail out” packages. Do you?
Stay tuned, the details are coming…
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