Whether you are the type who thinks it is unfair that judges be allowed to modify someone’s mortgage to prevent foreclosure or not, most experts in the field will tell you that—like it or not–our current real estate mess is not likely to get repaired without courts being given the power to change the terms of a mortgage if lending institutions balk at doing so.
That’s the reality…deal with it, folks.
- Image by Amy Jeffries via Flickr
That said, President Obama has dropped the ball big time on this one. He was in favor of changing the bankruptcy laws when he was taking aim at Hillary to get the White House gig, and he even backed it publically once he got the job.
But last week, Obama showed his true colors–and the extent to which he will roll over and play dead to the banks–when he did and said nothing as a dozen Senate Democrats linked up with Senate Republicans and managed to kill the amendment that would have brought about the change needed to deal with the growing number of troubled motgages.
As a New York Times editorial says: ” …when the time came to stand up to the banking lobbies and cajole yes votes from reluctant senators, the White House didn’t. When the measure failed, there wasn’t even a statement of regret.”
Some argue, wrongly, that the banks and other lending institutions will gladly step up to the plate and deal effectively with this problem on their own without government intervention. Those who think this are…how should I put this diplomatically?—-fools!
The track record for banks and other lenders doing this to mitigate foreclosures is dismal.
In March alone, the number of foreclosure filings may have been as high as 341,000, estimates the NYT.
Bankruptcy reform is needed if the real estate market is to have a chance of true recovery. You can wish it weren’t so, but, think about it, did you ever really get that wish you made to the tooth fairy when you were five? Bet not. (Unless your parent cheated, of course.) Or, were bankers!!!
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Charles FeldmanCharles has written 149 articles for us.
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Charles is currently reporting for KNX Radio in Los Angeles, is the co-author of the book No Time To Think, and can be found commenting about the news on his blog, The Feldman Blog.
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I was also surprised to learn of this a few days ago. It does not seem in-line with the goals of getting out of a recession and decreasing the number of foreclosures.
Even with this, I do think that the “bottom” of the housing market will be here before expect it. Things are already starting to turn around in many states. However, there still is the risk that there could be a blip of activity and then things slow down again as well.
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To me it’s a combination of borrower’s and lenders. The borrower’s are strapped and some need a way out, but they don’t have the income, equity, credit or any combination to get a new loan to give them some relief. Throw into the mix that banks are holding money to make their balance sheets look good, they are raising credit scores to qualify, underwriting guidelines seem to change everyday, the mortgage programs get pulled, then they’re offered, it’s hard to keep track. Most the broker’s I know are putting people through FHA, now getting those loans through is a lenghtly process as everyone seems to be doing the same thing.
I don’t agree there is more to this than meets the eye. There are alot of people out there who has paid for their home. The mortgage companies and it’s servicers have committed fraud. People need to look at their statements and make sure that they were not forced into foreclosure for the servicer not applying payments properly.Take a long hard lokk at your mortgage ask for the note. Mortgage companies are required to pay your loan according to the requirements of the mortgage.With that being said they must pay interest first, princepal next, so on and so forth..So when U make a payment in full it must be applied according to an order stupilated by ur mortgage or loan. when they take any money and apply it to anything else they have a major violation of a contract….
We need BK Cramdown
“our current real estate mess is not likely to get repaired without courts being given the power to change the terms of a mortgage if lending institutions balk at doing so.
That’s the reality…deal with it, folks.”
Do you have anything to back up this outlandish statement of yours?