Bailing Out the American Dream
Came across Property Crossroads last week. Dan Rafter wrote a blog entry about the people he came across that felt the government should not bail out the homeowners affected by the mortgage debacle that has many homeowners facing foreclosure or talking to their banker about short sales.
In my business, I hear from people who are in danger of losing their home. They have worked hard to keep up on their mortgage payments, but usually they took some bad advice and now have a mortgage payments that have ratched up to a point beyond what they can afford to pay. I would compare a mortgage professional to any other professional that one might go to for help — a doctor, lawyer, contractor, etc… Just as in these fields there are those who would take advantage of people so too did some mortgage brokers take advantage of home buyers.
Should the government step in and help homeowners who were paying their mortgages prior to the balloning of payments so that they can keep their homes? Well yes. Here’s why:
- The housing market is already in a slump… the inventory on the market is already beyond what can sell in a six month period and sellers are continuing to place more houses on the market.
- Buyers are leery of jumping into the market and face what they see other buyers going through. Even though reputable lenders are making an effort to ensure that borrowers get a mortgage that is within his/her means.
- More houses coming onto the market through short sale or in an effort to prevent a foreclosure will just add to the already over-burdened market.
- With a little help from the government, through encouraging the extending the loan period or other measures that will keep mortgage payments within the range of payments these homeowners could afford makes sense.
If homeownership is the American dream then helping prevent that dream from becoming a nightmare is American too.