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Why is a 30yr mortgage set in stone?

By Sanna K. Thomas

Real Estate Agent with Sellstate Next Generation Realty

February 18, 2009 01:53 PM

Today the stimulus information was released and as I mull over the information my question is, "Why the forgiveness and why not a 40 or 50 year mortgage?" Do we really need the banks to "forgive" the loss of value or should we hold the banks and the borrowers accountable for the full debt?

The inflated value has driven taxes through the roof, but the homeowner who was not involved in the frenzy is responsible for their inflated taxes, with no forgiveness. They are also now responsible for their debts, due to job loss. Will the banks forgive those who did not participate?

Rather than forgiveness we should be resposible and payoff our debts over an extension of time. Those who have truly learned their lesson will not make this mistake again. But those who have been forgiven and not learned, will continue to make mistakes, at our cost.

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Bob Foster

Century 21 Lanthorn R. E. Ltd. Belleville, Ontario - Belleville, ON

Hi Sanna,

I think the problem is that the payments on a mortgage longer than 30 years aren't significantly lower. I could grab my HP 10b11, but I'm feeling a bit lazy tonight.

There is another option that might work, though, and that would be to set things up so that those who benefit from relief from taxpayers pay something back towards the relief after they have had a chance to clear the mortgage - say in 20 or 30 years. That way, the burden on our kids (who will likely inherit all this tax debt) could be lessened.

Feb 18, 2009 02:05 PM

Heather Chavez

Second Self Virtual Assistance - Caldwell, ID

Real Estate Virtual, Assistant (928) 692-3235

I wondered the same thing, Sanna. But, it seems that Bob has a point as well. My parents, who have been faithfully paying their mortgage even as they have had to tighten their belts due to the economy, won't have anything "forgiven", but the person who is not paying their mortgage because the value of the property is much less than what they owe on it just doesn't seem fair.

Feb 18, 2009 02:09 PM

Susan BeVille

Keller Williams Cornerstone Realty - Ocala, FL

Great question! I think Bob is probably right as well.

There are many people feeling the crunch that are struggling to pay their debts and will have nothing forgiven while others who made bad judgements can just walk away!

Life is sometimes not fair!

Feb 21, 2009 11:03 AM

Sanna K. Thomas

Sellstate Next Generation Realty - Ocala, FL

PA GRI, E-Pro, SFR, AHWD, LH Ocala Florida Luxury

Thank you all for your comments. My idea on the 40-50 year mortgage was to refinance at a much lower rate, but not to forgive the debt. Refinanace the loan at the lower rate, at current market value, making it easier to ride out the storm and balloon the balance of the note upon sale. Similar to the SHIP program. That would keep them in their homes for a longer period of time, as we once lived, and when they finally sell many years out, either the market recovery has brought their homes value up to the balance or their savings has allowed them to payoff their previous debt and make the move.

Thank you all for responding,Sanna

Feb 22, 2009 02:38 AM

Why is a 30yr mortgage set in stone?

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