Sandy's Snipets

Needless to say, NONE of us are happy with the state of the real estate market.  What’s the answer?

• Is it to push for loan modifications?

• Should we get it closed at any and all costs?

• Should sellers just ‘walk away’?

What I can’t fathom is why the banks are reacting to the defaults in the same way they have done for decades – by foreclosing or starting the process.  Their business process needs to change!  The blood has to stop flowing before you can suture the wound.

Realistically, the bank/investors/taxpayers are losing money on every loan that goes to short-sale or foreclosure.  It’s gone forever.  So find another way to keep the people in the house and have them re-pay what they borrowed.  I can’t walk into a car dealership and say to them that my car is worth less now so lower my principal balance to what it’s worth because I didn’t put any money down, I own an SUV (and we know many of those are not fuel-efficient), and I don’t feel like paying for a vehicle that isn’t worth what I contracted for.  Try telling that to GMAC, Chrysler Credit or FMCC or any of them.

If a homeowner has been paying his mortgage for the past 3 years and now can’t meet the payment because the rate adjusted, then re-vert him to the rate he had and was paying on – use common sense.  Modify only the rate, not the amount due overall.  The bank knows if that payment has changed and if the homeowner made all the payments on time up until then (they do report it to the credit bureaus) – so use the information to assist the homeowner rather that beating him up with it.  Hire and train staff to work with people before it’s at the courthouse steps. Prevent the short-sale/foreclosure rather than letting it go that far – and get re-paid your entire principle over time (or with a sale of the home in the future) as you would have anyway rather than taking a permanent loss.  Stop thinking short-term and start looking down the road 1, 5, 10 or even 15 years – where does the bank want to be – with a  less ‘collected interest’ or a whole lot of ‘inventory’ on their books?

Homeowners too need to step up and accept the fact that they bought it at the price they paid and stop complaining about it not being worth what they paid.  No one forced them to buy!  You were overjoyed when you were at settlement – ride it out and re-pay the loan.  We have a limited amount of space on this earth and unless we manage to blow up the planet — it’s not going away like Enron.  It will be here in 5 or 10 years, you just won’t have made 1000% on it.

What’s your thought or solution?