Here is an interesting twist to the "Bailout" - Although I am all for supporting the people on main street, it will be interesting to see how the program will roll out and if it will actually help and not hender.....
Thank for the information Tom.......
A new article published 2/12/2010 states that mortgage companies need to give incentives to people to stay in they home and not walk away or strategically default.
Upside down property values are leaving nearly 25% of homeowners owing more on their mortgage than the home is worth, and many are getting advised or may find it tempting to walk away even if they are financially able to keep making their mortgage payments. The idea of this may be easier or less stressful if they “strategic default” to get out from under the debt completely or to force the servicer’s hand for a loan modification. It is growing concern within the mortgage industry, and I struggle with this everyday dealing with short sales, as a CDPE, and the communication breakdowns with stressed out sellers.
In the article, the Loan Value Group LLC (LVG), is proposing it is time to pay current borrowers to stay in their homes. The company is introducing a new program this past week to help lenders and servicer identify borrowers at risk of walking away and implement an incentive program in which the homeowner receives a monetary rewards, "bailout", if they stay in the home, remain current on their payments, and do not change the terms of the original mortgage note or reducing principal. The Responsible Homeowner Reward (RH Reward) program was developed on a foundation of behavioral economics and employs patent-pending technology developed by LVG.
According to the Loan Value Group, there are more than 10 million homes in the United States with substantial negative equity, representing nearly $2 trillion of mortgage debt, WOW!
This is not a proposed program the article says it is going to be implemented by a largest investors in consumer and mortgage debt in the United States. The client, who requested anonymity while they roll-out the program, has purchased and sold over $5 billion of debt since 2008. Hum, wonder who that is :)
Well everyone...watch your mail! I know I will!
Until next time,
Tom
Read full article:http://www.dsnews.com/articles/company-proposes-paying-homeowners-not-to-walk-away-2010-02-12
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Some great information, paying homeowners to stay in their homes may cause more problems though, as soon as a bank modifies the loan for one homeowner, the guy next door goes into default
The Tax credit is also a form of RE bail out. It still bothers me a bit that people get bailed out for deals like this. People should be held accountable for their actions, walking away?? just burns me the wrong way.
Gwenn - I'm afraid this is just another in the list of ideas that, while the intention may be good, the results will be less than expected. We have yet to develop a workable plan that will actually save the millions of homeowners facing foreclosure.