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Plan to help distressed borrowers falls short

Lenders stuck with deciding who qualifies for help, how to handle REOs

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Various segments of the housing industry have floated "what-if" balloons regarding possible solutions for the national mortgage mess. The latest has been the Bush administration's roundtable discussion with lenders about the possibility of extending lower, introductory rates on mortgages to borrowers with poor credit histories who were either misled into taking on a risk they could not afford or genuinely did not understand the consequences of an upwardly adjusting loan in a down market. The idea has merit, especially given the fact that people who are behind on payments are embarrassed to contact their lender about their financial picture. Other homeowners try to hang on to the bitter end because of social status -- they definitely do not want their neighbors to know that they can no longer afford their house. In addition, the numbers of potential defaults are not yet slowing down. An estimated 3 million loans are scheduled to adjust (upward) next year, which translates...