Today, Neil Garfield had GREAT post that is confirming what I have been pondered for months. Housing modification loans MUST start reflecting drops to fair market value(FMV).
In my never to be humble opinion, ALL Loans should be immediately adjusted to reflect FMV without making any mortgagee jump though loopholes to make right the payment structure. Call me radical but I go further than most - I don't think one single person in America should have take hours to fill out new paperwork, submit - get rejected, play games and wait a year for a modification. Just fix the paperwork at the bank and assign new value, payment etc. Let homeowner sign it if they like or go to the table to negotiate. Lower everyone's payments fast for every single homeowner in America! A girl can dream!
As Neil indicated it is not a gift to address the fair market value in modification process. Strategic walkaways are not only a trend but many bankers I've talked to seem to see nothing wrong with it. The current situation is going to cause ALL HOME VALUES to drop, in my opinion. And increase walkaways and short sales and possibly more foreclosures as homeowners previously treading water are now drowned with the banks holding their heads underwater.
It concerns me that socially we "accept" strategic walkaways, shortsales , forced bankruptcies and yet do nothing to really address the homeowners that want to salvage their homes. Isn't it ironic that the banks are shortselling to about 1/4 of the value of the home when a homeowner is willing to pay off the home eventually?
Read Neil's blog (and excerpt follows) and get the impact of how LOWERING Principle amounts could help ALL of America. If you are in trouble or foresee trouble with your financial situation, then make sure to check out NACA or check out the mortgage-challenge group for help in fighting foreclosure.
Posted on June 17, 2010 by Neil Garfield
Editor’s Note: Housing prices will continue to decline until median income starts to flatten out. All signs indicate that we are in for another 10%-20% drop as conventionally measured. Remember that housing prices do NOT take into consideration selling expenses and concessions at closing. All things considered, housing prices should be at least 8% under what is reported.With that 8% reduction, more homes are underwater than what has been reported. In fact, more homes are underwater than what their owners think they are.Given another 10%+ reduction, the number of homes underwater will increase substantially as many are considered “near” break-even but are actually substantially underwater. This in turn will increase resistance to selling as wellas current resistance to buying, knowing that th >>>>>KEEP READING