Are you a "responsible" homeowner?
The question may seem odd or silly, but if you meet the definition, the federal government wants to help you refinance your mortgage.
The phrase "responsible homeowner," which is already in danger of becoming hackneyed, surfaced last year and was picked up by President Obama who declared, "We must … do everything we can to help responsible homeowners stay in their homes."
But the question must be asked: Who is a "responsible" homeowner?
The federal government’s new Making Home Affordable program seems to define a "responsible" homeowner as one who is creditworthy and has shown a commitment to making his or her mortgage payments. Homeowners who meet those guidelines, and have a mortgage that’s owned or backed by Fannie Mae or Freddie Mac, will be allowed to borrow up to 105 percent of their home’s current value with the government’s blessing.
But shouldn’t "responsible" homeownership mean more than just making your mortgage payments?
Are you still a responsible homeowner if you’ve borrowed more than the value of your home or more than you could afford to repay? Are you a responsible homeowner if you took out a payment-option loan and made only the minimum payment every month? If you tapped out your equity as if your house were an ATM? If you neglected to save enough to make your mortgage payments if you lost your job?
Are you a responsible homeowner if you haven’t paid your property taxes or you’ve let your homeowner’s insurance lapse? If you’ve allowed your home to fall into disrepair? If your car is parked on what used to be your front lawn, your trees are dangerously overgrown and your garage is a fire trap?
Are you a responsible homeowner if you’ve never attended a civic association meeting or supported your local neighborhood watch? If you’ve never been inside a polling place since you were first old enough to vote? Could you be a "responsible" homeowner even if you’d overlooked, ignored or shirked every other responsibility of homeownership?
Admittedly, this paragon of homeowners is more myth than reality. We’re all only human, and none of us wants to suffer Homer Simpson’s horrible fate of having the too-perfect Ned Flanders for a neighbor. Indeed, no one is 100 percent responsible all the time.
Given that innate tendency toward rebellion, the most important question about today’s "responsible" homeowners may be whether they’ll continue to make their mortgage payments after the federal government helps them refinance into these new loans.
Yes, their payments may be lower, but they’ll still owe more than their homes are worth, plus the additional costs of refinancing. And they’ll probably have figured out that the lower payments are due not just to lower interest rates, but also to fresh terms of 30 or even 40 years of payments.
Granted, the homeowners who qualify for these loans will have been deemed "responsible" by no less an authority than the federal government, so presumably we can count on them to pay up even in the face of such unfavorable circumstances.
But suppose home prices drop another 10 percent, and then these responsible homeowners decide to bail themselves out of their homes? After all, we don’t all want to be the grown-ups all the time. Sometimes we don’t want to mow the lawn or repair the rain gutters. Sometimes we don’t want to pay our property taxes or endure another boring homeowners’ association meeting. Sometimes we want to skip out. And if the situation is dire, we may just not want to make our mortgage payments.
If the most responsible among us decide to walk away from their mortgages, we’ll all be left holding the bag.
Copyright 2009. Marcie Geffner. All rights reserved. No part of this article may be used or reproduced in any manner whatsoever without written permission of the author.
Marcie Geffner is a freelance real estate reporter and former managing editor of Inman News.
Editor’s Note: For information about publishing this column on your Web site or in print, contact Elaine Baker: (510) 658-9252 ext. 128.
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