Housing Crisis & Mortgage Modification
Homeowners are increasingly qualifying for mortgage modifications so that they can stay in their homes. The expense is a protracted mortgage with no principal balance reduction to accurately reflect the bursted bubble of housing prices. Once again a band aid was handed out with only short term assistance and in some instances a balloon payment at the end of the term.
According to a New York Times article millions of homeowners are underwater because the value of their homes are so much less than their outstanding mortgages. Many people are living off of their credit cards digging their debt hole faster and farther. Might it be that the banks don’t want to take the losses on defaulted loans so they let the default and foreclosure process continue on the slow path. As suggested in the New York Times article does principal reduction reward bad behavior? Allowing refinancing of mortgages underwater without requiring a default for modification might free up money so that mortgagors don’t have to live off their credit cards.
The solution to our housing crisis has not been found. In many ways it is exacerbated by the Home Owners Association jumping into the game and forcing a quick foreclosure and sale and further driving down the prices of homes. Also, without proper planning, defaults from foreclosures will further follow homeless mortgagors for years to come as debt collectors continue to sell these debts for collection. What system will track these debts as they are paid off.
For more information regarding mortgage modification, please contact Audra Simovitch, Esq., the Director of Consumer Financial Services for the LaBovick Law Group.
