Feb 25 2009
Bailing out the Homeowners
Rick Santelli of CNN called homeowners that were in foreclosure losers. The claim is that these people bought homes they couldn’t't afford, or agreed to loans that would adjust. Yes the above scenario did occur. But this isn’t what is continuing to fuel this fire.
If you would have bought the house I currently live in in 2006, you would have paid close to 600K with closing costs etc. Today you can buy this same home for 380K. You would be more than 200K upside down. You wouldn’t be able to refinance, you wouldn’t be able to sell. If you wanted to sell you would have to go through a long process to get your bank to approve the short sell. With so many houses on the market, most buyers would skip over your home in favor of buying something that wasn’t marred with all the paperwork.
So what do you do? You stop making mortgage payments and live their rent free until you are forced out. The people doing this aren’t unemployed, they aren’t somebody guilty of getting into a mortgage they can’t afford, they aren’t guilty of falsifying income. They are guilty of buying a home in the boom and now have a majority of their wealth in the toilet.
As the housing slide continues, the above scenario gains steam. More and more people find themselves upside down in their mortgage. Why sit in something that has no value?
Maybe the plan Obama is outlining will help to stop this slide. I rarely, if ever, agree with a democratic plan to save us. But this one is an exception. This one I can get behind. It doesn’t just benefit those in foreclosure, it benefits all of us. After all, if you can stop the value of my home from sliding even further, then I say get after it. And if you can stop this snowball, you can also stop my 401K from sliding on a daily basis, you can stop the layoffs, you can solve the real problem that we face.
It’s time to stop the finger pointing, solve the problems, and move on. There is plenty of blame to go around.
Rep. Marcy Kaptur a Democratic Congress member from
Ohio (and the longest-serving Democratic woman in the history of the House.) encouraged people who’s homes are being foreclosed on not to leave but seek representation. There is a national number people can call to get proper legal representation, (888) 995-HOME. Or, contact The Neighborhood Assistance Corporation of America they have forty offices around the country and are helping 10s of thousands of people by restructuring mortgages, permanently reducing their interest rate to as little as three percent and reducing their principal to make their mortgage affordable. You can find them on the web at naca.com .