No responsibility for actions
Letters to the Editor
By Inman News, Thursday, May 1, 2008.Bookmarking Sites
Re: 'Judges should have say in mortgage modifications' (May 1)
Dear Editor:
Woe is me, woe is us! Why don't we all just stop making mortgage payments (which are based upon our "promise" to pay), wait for foreclosure, file bankruptcy and then have a judge reduce the principal balance, the interest rate and the monthly payments?
Sounds like a win-win to me. After all, no one else takes any responsibility for their actions -- why should we? Ignorant people have been taken advantage of since time eternity. They never learn.
Ken Fisher
Ken Fisher & Associates, Inc.
Fishers, Ind.
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Submitted by Bruce Hahn on May 1, 2008 - 5:45pm.
American Homeowners Grassroots Alliance
American Homeowners Grassroots Alliance
Marcie is right. There is no reason homeowners should be denied options available to bankruptcy judges for everybody else but homeowners. Why should judges not be allowed to modify homeowners mortgage debt when they do so routinely for mortgage and other debts of big and small businesses, real estate investors and everybody else except homeowners?
In fact until the bankruptcy laws were changed, judges could and did modify the terms of homeowners' mortgages as well. They did so when appropriate, protecting the interests of lenders to the greatest extent possible while doing so, and the marketplace continued to work just fine. Lenders lost little money on foreclosures and mortgage interest rates were virtually unaffected by the relatively few cases where mortgage loans had to be modified.
We wouldn't be facing today's foreclosure crisis if lenders had not abandoned sound underwriting practices in the first place. One way to incentivise lenders to rediscover the benefits of sound underwriting practices is make lenders again subject to the inevitable results of that abdication of responsibility and bad judgment, which was a hyperinflated market followed by an inevitable bust.
Lenders should have seen that coming, and should not have lent money to people who could barely qualify for the teaser rates. Many of those borrowers were financially naive, but lenders are not. Lenders knew, or should have known full well that many of those home buyer's incomes were not going to increase fast enough to afford the substantial payment increases when the loan adjusted.
For lenders to try to shift blame to homeowners for the disastrous results of their irresponsibility is the height of hypocricy. The actions of mortgage lenders are the main cause of the fragile state of our current economy. Allowing lenders to continue to benefit from a law that simultaneously shields them from the results of their irresponsibility and discriminates against homeowners is not going to teach lenders to be responsible.
Few lenders are participating in workout programs despite encouragements and enticements for them to do so under terms that would net them more money on their nonperforming mortgages than they would get at a foreclosure auction. Restoring bankruptcy options for home foreclosures will help wake lenders up from their state of denial. If those options for bankruptcy judges were restored, we would soon see more workouts with naive buyers who can't afford to keep up with payments and end a lot of misery for many unfortunate American homeowners.