12/30/2010

A Mortgage Principle Reduction for All of Us?



Controversy is arising as the Treasury Department announced some progress in their recent initiative of reducing principle amounts for homeowners in need. Rather than just reducing rates and lengthening loan terms, reducing principal loan amounts as part of the equation seems to be working out. this from the office of the Controller of Currency. The report states that it has gone from 22 reduction actions in the 3rd quarter of 2009 to 6011 actions in the 3rd quarter of this year. It makes sense really, that reducing the principal amount (amount owed on the home) and with the historic low interest rates the payments would be much less, which reduces foreclosures and helps the homeowner. It appears that the government is trying to get the mortgage companies to feel the same pain as the rest of us. After all it was the predatory lending practices that caused the problem to begin with, right!?!


Bank of America beat them to the punch and has already been reducing mortgage principles but only with the mortgages that were the high risk Adjustable Rate Mortgages (ARM) of the people in trouble.


This all sounds good but what about the millions of people that are making their payments on time? Should they also get a mortgage reduction? What happens when the market changes, and it will, will the folks that have continued to make payments and still carry the same principle amount be able to sell their homes? Will they have to bring money to the closing table when they sell? To me, it makes more since to reduce the principles of all the homes that are upside down so we can all start over. This is how it would work...Initiate a government appraisal process that re-evaluates all the homes in each state based on current sales then lower each homeowners principle to that amount. Realistically, the people that were going to foreclose will anyway and when they do it won't be sold as an REO (Bank Owned) property for any less money than they would have gotten and could be sold for more because the home won't be torn up!


The investors are already losing millions of dollars but it could stop the bleeding. This would allow people to start selling their property again giving the investors a chance to get new loans from credit worthy borrowers to offset the losses. That way the folks in trouble can sell their homes out right without damage to their credit and the rest can sell too! Win Win, I say :)

11 comments:

  1. Think of what had happened on the past and make sure that we have the right knowledge to achieve success. Its important to know what to do for us to achieve things effectively for our Investment in Real Estate. We have to protect our business specially for us to support our family needs in the future.

    http://property-investments101.blogspot.com/2013/10/real-estate-investment.html

    ReplyDelete
  2. Choosing to purchase a home and get a home loan is a genuine choice with huge duties. Not just should you burn through cash forthright to acquire your credit, you'll be entering (or expanding) your obligation. visit the website

    ReplyDelete
  3. Most by far is purchased and sold through real estate representatives. We utilize "agent" and "dealer" to allude to a similar expert.Properties in San Antonio

    ReplyDelete
  4. When will you updatewww.mortgage-advice-online.org? Plz include some new calculating features in it as well.

    ReplyDelete
  5. This comment has been removed by the author.

    ReplyDelete
  6. One of the fundamental disadvantages with settled rate mortgages, notwithstanding, is that borrowers can't profit by diminishes in loan fees without renegotiating, and this can be expensive.
    mortgage broker

    ReplyDelete
  7. A substantial money related organization is somebody or organization that gives mortgage products of a few distinct loan specialists. mortgage

    ReplyDelete
  8. Why investing in real estate is desirable over sparing or making different sorts of investments.why real estate agents fail

    ReplyDelete
  9. Entire of market mortgage guides offer exhortation through directing a full reality discovering meeting, moderateness appraisal, talk on the buyers feasible arrangements and goals and afterward can organize the mortgage through the moneylender along these lines reducing the pressure which comes when buying a house. mortgage broker manchester

    ReplyDelete
  10. Banks can forgive some mortgage principal in part because the government has a program with billions of dollars in funding to promote partial cancellation of loans. But even though a bank may agree to cancel a loan, foreclosure might still be your best bet.
    homeia.com/the-best-10-real-estate-agents-in-dallas-texas/

    ReplyDelete
  11. You have done a great job on article. It’s very readable and highly intelligent. You have even managed to make it understandable and easy to read. You have some real writing talent. Thank you.
    Mortgage Broker Leicester

    ReplyDelete