Mortgage question

Discussion in 'Et Cetera, Et Cetera' started by lucky8, Oct 12, 2008.

  1. lucky8

    Gold Member

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    Why won't banks and mortgage companies do themselves a favor and temporarily stop foreclosing on people's homes? They are only screwing themselves by foreclosing on people right now, so why not rework the mortgages with the homeowners so banks can still receive payments and people can still keep their homes?

    I mean, business wise, the only real reason to foreclose on someone's home is so you can sell it to someone who can make the payments, but there's really no one to sell foreclosed homes to right now.

    If banks take people's homes because the owners can't afford the rates, but the banks can't sell the homes to anyone else, it seems rather idiotic to take away the product from their only customers. The best option would be to rework the mortgages in order to keep their cutomers. Rework mortgages so people who own them can afford to make payments. Afterall, a bank owning a home but not being able to sell it is of no benefit to the bank whatsoever, especially since home values are falling, so why not think outside the box and do something out of the ordinary like reworking mortgages? Good businesses aren't afraid to adapt to the changing environment, but it seems to me lenders have forgotten this key part of business.

    Extend mortgages another 5 or 10 years so people can make lower payments, combine this with lower interest rates and MAYBE revalueing previously purchased homes at what they are worth today, you have a win-win situation for both the bank and the homeowner. The banks would still have money coming in from these properties, DEFINATELY more money than they would by foreclosing on millions of homes that can't be sold, and the homeowners would still have their homes. Not to mention extending someone's mortgage would mean more interest for the bank in the long-term, so ultimately they would make a little more money than they would if they A)kept the mortgages the way they are now and B)foreclosed on the home. Smaller, extended payments are always better than no payments at all.

    Am I completely missing something here or would this not help to partially alleviate some of our current problems?
     
  2. cocktoberfest

    cocktoberfest New Member

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    You are not missing anything. There are programs set up for people to re-work their mortgages with the banks and stay in their homes. Like this:

    Home Mortgage Crisis: What you need to know - California State Assembly

    If you are facing financial difficulties, the following steps can help you keep your home.

    • Contact your lender NOW! Many people avoid their mortgage lenders when money problems occur, but they can help. Most lenders have workout options and are willing to explore every possible option. The key is to contact them as soon as problems occur.
    • Stay in your home. You may not qualify for assistance if you abandon your property.
    • Talk to a Housing Counselor. Speak with a U.S. Department of Housing and Urban Development (HUD)-approved housing counseling agency near you at 1-800-569-4287. They can help you assess your financial situation, prioritize your debts, determine your options, and help you negotiate with your lender. They also have information on services and programs that may help you. They may also offer credit counseling. These services are usually free of charge. For more information, go to the U.S. Department of Housing and Urban Development website at Homes and Communities - U.S. Department of Housing and Urban Development (HUD).
     
  3. Drifterwood

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    I don't think so. If you can't afford your $500,000 mrotgage, you probably can afford the rent that I would charge at the same % rate if I was able to buy the house for $250,000.

    People are in denial that the real value of their homes is pretty well mirrored by the relative downturn in stock prices. Certainly in the UK, that is.

    If you add what has been lost on paper in house prices, to what has been lost in the markets, it is a very big number. Governments are trying to buck the market by supporting banks so that they will not have to foreclose so readily. We'll see whether this is possible.
     
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