Isn’t it about time homeowners got some help or,
if not, start making some wise strategic business
decisions on their own regarding whether or not to keep
their homes? Afterall at the expense of taxpayers,
homeowners, Wallstreet, and investors, banks within the
last couple of years have received several bailouts to
ensure their doors are kept open.
The government has been protecting most large banks from
bankruptcy or failing from the housing bubble by printing
and distributing money like “mad” to the major banks. One
could say the government is responsible for causing this
mess due to their liberal policies and legislation. Banks
were forced to lend to almost anyone who had some income.
Home loans too should never have been securitized on Wall Street,
but since banks are now too big to fail, the government is
supporting the securitization of loans on Wallstreet.
So what is a homeowner supposed to do? Years ago, homeowners
had a relationship with a local bank so both sides could sit
down and talk and perhaps renegotiate a forebearance or loan
modification. Not today, because not only is there no
relationship, but it is almost impossible to negotiate because
the deeds are either lost or have been sold piecemealed. No
one really knows who owns the deeds or who can make a decision.
Bank regulations are also a major stumbling block. A massive
amount of loans are nonperforming or are underwater due to the
great recession. The banks are required to have a certain amount
of money in reserve to cover the bad loans. If banks actually
showed a 30% drop in loan to value, most banks would have to
shut their doors. Thus they can’t negotiate loan modifications.
Their books would be way too far in the red.
How do I know this? A major bank called up a friend of
mine who is an appraisor. He was asked to do appraisals on
commercial property that he did 6-8 years ago. The catch
though was that for him to get paid, the values he finds
must be the same as previously done. Another bank executive
who I know who did in-house appraisals, just found out he’s
been demoted. His numbers were far too conservative for the
president of the bank. Banks are simply unwilling to face
reality. They simply cannot withstand a hit. Home and
commercial values have dropped over 30%, but banks continue to
refuse to accept this fact. If they did, they would have to
close up shop.
Banks are worried though, because more and more homeowners
are giving up and thinking strategically just like banks.
Sure homeowners should honor their loan commitments, but many
have to move due to job loss, need to upgrade or downgrade,
or are not wanting to throw good money away since their homes
are completely underwater. Homeowners took a risk when
buying, but so did the banks. Many loans were predatory or
have simply lost value.
Banks make business decisions everyday, and homeowners
should too. Like banks, nothing personal just financial –
it’s protecting one’s money and family. Furthermore, there
is no moral clause in a mortgage packet, just numbers,
interest, and procedures to follow should a homeowner
default.
If you are thinking about strategically defaulting on
your home loan seek legal advice by contacting an
attorney to protect your credit, and to limit any
financial ramifications. Banks can go after the loss,
but not as likely if it is a primary residence and
if one has tried to work-out the problem. However, banks
don’t have to cooperate. Heck, I have seen banks
foreclose on homeowners who simply didn’t make a late fee
payment, were two weeks late on their mortgage, or forgot
to add 80 cents into their payment. Banks at times
make no sense, so two can play this game. If Washington
can’t solve the problem, the current administration and
the banks are going to find out that many homeowners won’t
pay or make “cents” either!
Have a question about strategic defaults or foreclosures?
Call 1.800.826.1929
ForeclosurePreventionInstitute, LLC
271 Viking Dr
Battle Creek, MI 49017
http://ForeclosurePreventionInstitute.com
Disclosure: We are not attorneys.
Stopping Foreclosure
