Most of us understand how so many people became "upside down" in their homes. Lenders, appraisers, and even Realtors were swept up in the tide of over pricing. Builders, investors and speculators added to the mix. The true innocents were the first time home buyers or those homeowners who were told that they had thousands in equity in their homes.
Imagine what it would be like to be short of money with medical problems or something similar and read all of those ads and letters about refinancing your home and taking the money out. It was an answer to your prayer.
Fast forward to 2007 and REALITY. Those wonderful adjustable mortgages are in the process of adjusting UPWARD. Home prices have reached the maximum limit. Selling is not an option as the market reflects the new home values. Homeowners are unable to keep up. As they fall behind on mortgage payments and offer partial payments they are told absolutely no! Thus the debt becomes much larger. Add to that the penalties and late fees. Many homeowners just packed and fled. Others maxed out their credit cards to pay the mortgage; then they packed and filed.
As lenders commenced foreclosing on these homes they quickly discovered that the value was no longer there. NOW they were ready to accept partial payments but it was months too late. The terms Loss Mitigation and Loan Modification became common. Homeowners were advised to negotiate with their lender. Sure, that makes sense; these were the people who helped to put them in these horror situations. Others were told to seek an attorney. (If they had the money for an attorney; they wouldn't be behind on the mortgage.)
Finally our government stepped in. Stepped in what? The offer of new lower rate mortgages were only available to those with squeaky clean credit and who were not behind on their payments. Say what? If they were in that delightful condition, they wouldn't need a new mortgage. Enter the "Short Sale" market where lenders will negotiate with a qualified buyer under contract to pay less than the original mortgage.
I've heard on national TV that homes are selling for 50% of their actual value. Sure they are, if you are counting from that over inflated price! Actually, the value is closer to fair market. These negotiations are extremely stressful on the seller, the buyer, the new lender and the Realtor involved, but not the bank. The employees at the mortgage companies and banks work 9 to 5 whether a home sells or not. Sort of like our government officials. They receive salaries and benefits as the problem escalates.
My question is; "why are these unscrupulous lenders still in business, advertising on the internet and lending money, AND receiving millions of dollars from our government?"
Author Resource:-
Author Resource: Patricia Eisenhauer is the author of "Realtors Are Real People" published in 2008 which included a portion on the mortgage market madness. She speaks at functions around the State, not about what has happened, but rather how to fix it!
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