What can these people do when facing foreclosure?
Question:
Thanks for the info
Answer:
Your assumption - it is best to keep people in their present homes - is wrong. In the past few years, people have purchased homes they could not afford using money they should have never been loaned. No matter what is done, short of forgiving massive amounts of debt, these people will still be in over their heads.
IMHO, the correct thing to do is split the loss down the middle. Make the lender responsible for half and the homeowner responsible for half. Sell the house without the black mark of foreclosure on the credit report. Both the lender and the borrower are off the hook. Then get the former "homeowner" into something that he/she can afford, keeping in mind he/she must repay the existing debt from the previous home. So it may be a one-room walk-up, but if that is what the person can afford, than that is where the person should be living.
A big part of what has gotten the housing market into this situation is the belief that people "deserve" to own a home of at least a certain standard. That if you want the American Dream, you can instantly purchase it. Our grandparents' generation understood this required sacrifice and planning. Bailing out irresponsible people will do nothing to get this principle back in our collective psyche. Giving someone a loan they still cannot afford just Band-Aid's the problem. And using my tax dollars to reward these people for their foolishness penalizes those of us who purchased within our means and paid extra every month on our 30-yr fixed loans because we knew the teaser rate was problematic.
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Mark
What tactic can they use for protection? Protection from what? Themselves? The greater majority or people facing foreclosure are in that position because they put themselves there. Very few people who go into foreclosure get there because of something outside of their control (medical, lost job, etc.)
My opinion is that this crisis is a combination of things. First the prices were getting out of hand, our own governmental agencies wanted more affordable housing, so lenders made it possible for people to buy homes thru ARM and Interest only loans. I agree that most folks probably didn't understand the implications of the ARM or Interest only, and the lenders weren't going to make a big deal out what could happen... So here we are. I wonder if "freezing" adjustments would help? Anyones' opinion is acceptable. But I do agree that for some they really shouldn't have been approved because they couldn't qualify for a regular loan and full payment. Some are just poor money managers and they will have to accept their fate. The Fed's are likely to lower the rates again soon, but I wonder if it isn't too little too late.
As long as you are making your mortgage payment on time, they can not foreclose. Even in bankruptcy, your home can be protected as long as you make that payment.
Everyone is looking to protect themselves. What about the lenders that you promised to pay. Do they not deserve some protection. After all, you (for whatever reason) decided not to make your mortgage payment.
The first thing is.. talt to the mortgage company, they are in the lending-money not real estate, they don't want your house.
Get rid of cash outflow.
Its stupid to pay $100 a month for a cell phone and loose your home because of money problems.
Live withing your means.
Work another job.
People were complaining they were going to loose their house because gas prices went up 30 cent/gal. If you are that close to going under that $5 makes the difference, you are in big trouble anyway.
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