RealTown's RealTalk

An excerpt from an editorial in the today's New York Times provides insight into a plan that may be nearing approval that offers hope for an early resolution of the home mortgage foreclosure mess.

John Wrote -The F.D.I.C. has developed a sensible plan that is being used, with promising early results, to rework defaulting mortgages at IndyMac, the failed Southern California bank. Under the plan, the banks restructure troubled mortgages � lowering the interest rate, extending the loan term or deferring payment on a portion of principal � so that they�re affordable. The goal is to reduce the monthly payment to about a third to two-fifths of a borrower�s after-tax income

Perhaps in other parts of the country loans were done different but here in MI most of the sellers we meet have low interest rates already. They also have newer loans, 5-6 years old, so neither of those options would work. Plus it will not work for those being relocated, those losing jobs or those that just want out of the home. And we see plenty of them. As for the last part I am sure there is much more to that - like value, job history, previous income, debt load.

Here in MI we had the unions raping the auto companies for years and many people bought homes based on high wages and overtime. Now the auto companies have no overtime and have given pay cuts - so the banks are going to reduce their house payments? Let's see your income goes down so your house payment goes down? What about the folks that took buy outs or early retirement and are working for a lot less? Do you hear bail out #2? This is crazy.

I'm working twice as hard as I did a few years ago so I can pay all my bills, maybe they need to get a second job.  Personally I think they make it to easy.

Snip from John-  The F.D.I.C. has developed a sensible plan that is being used, with promising early results, to rework defaulting mortgages at IndyMac, the failed Southern California bank. Under the plan, the banks restructure troubled mortgages � lowering the interest rate, extending the loan term or deferring payment on a portion of principal � so that they�re affordable. The goal is to reduce the monthly payment to about a third to two-fifths of a borrower�s after-tax income.

I have always believed that fairness is in the eye of the beholder. We all have differing ideas about what is fair. But one thing I know is that unless a solution that takes care of the victims who are losing their homes (not just the banks) we are not going to see our industry recover any time soon. We are not hurting near as much as some of your areas are hurting but even in our area, the flood of foreclosures is a dead weight on home prices.�

Carolyn - Congratulations on being a member of your community first, while doing your job as a professional in the real estate arena and a REALTOR. I agree that your first choice should be to keep clients in their homes, since troubled homeowners who decide to give up their homes only succeed in reducing the value of other homes in the community. And even though you will not earn a commission for helping that client remain in their home, I'm sure your name will be one that will be shared because you did the right thing. Thank you for being that kind of a person!

An editorial in today's New York Times included the following:

I just was forwarded a great article in National Business Review that filled in a lot of holes in my understanding of what went wrong regarding our current economic state of affairs. http://www.portfolio.com/news-markets/national-news/portfolio/2008/11/11/The-End-of-Wall-Streets-Boom?page=0 Great read!

Larry