When this whole mortgage meltdown started, it always seemed to me like the simplest thing to do would be to re-write these toxic mortgages to something the borrower could afford. It could be a lower fixed mortgage. It could be lowering the amount to a level commensurate with the actual appraised value.If all these borrowers could keep making payments the whole system would remain functioning. It would be trickle-up economics. The banks could share a little of the pain. Even before the meltdown, I heard some people proposing adjustable loans based on the appraised value rather than some somewhat arbitrary index that only benefits the bank. Does this sound sensible?
Skip the shorties unless you are lucky enough to step into a pre-approved number where a buyer had the paitience to stick it out and his offer was finally accepted by the lender. Then for whatever reason he could not close. The loss mitigation dept will only keep the file alive for so long, a good listing agent will scramble to find another buyer advertising the accepted number. File stays open with a quick replacement buyer and close within 45.
That's my point. Sounds very sensible but sense is not how they got in this situation. We look to them as if they should know what to do. I am afraid they are clueless.
I'll take disagreeing with the majority for $1,000 Alex.....
The number of loans in foreclosure as a part of all the mortgages out is small. Banks can't give a principle reduction deal to every loan currently in effect.
The banks can't, and shouldn't, give a principle reduction deal to their borrowers. Those borrowers who can't keep up with their obligations should face a consequence. Banks should also face a consequence if they can't recover their funds through the sale of the collateral.
As someone who does not yet own on 30-A this is music to my ears. I searched hard last year to work a short sale in Watercolor that did not pan out. That home has been unoccupied without electricity since May and the bank still has not finished the foreclosure proceedings. I cannot imaging the amount of mold that has accumulated on the inside, but it gave me very little confidence that the banks have a clue about dealing with the problem. There are going to be alot of sweet deals out there for the upper middle class with steady incomes that were previously reserved for the uber-wealthy.