Sunday, October 7, 2007
The Feds feel compelled to rescue some of the people that got caught up in the SubPrime lending schemes. The reduction in the prime rate appears to be helping those that are trying to get a loan, but I'm not sure how much it's really going to help those that are in danger of being foreclosed on. The "tiny print" of the "fix" the Feds are proposing, is unsettling at best. The borrower must be current on their loan and have equity in their home. The problem is this: (1) they are late on their payments, that's why they're in danger of going into foreclosure (2) they bought the house with 100% financing, thus, zero equity. In fact, worst case scenario: they are upside down!! My gosh this is complicated and sad. I don't think that I could get into that foreclosure business. They say you can actually HELP a homeowner that's in trouble by negotiating with the lenders and buying them some time to get their affairs in order. They can try to negotiate the amount they owe on the house enabling them to sell it without going into foreclosure. BUT, to me anyway, the bottom line is that a family is losing their home. I'm too much of a softie to be able to handle all of that!! One school of thinking is that some of these people went into these loans knowing they shouldn't. After attending a LOT of closings, I think that it would be very easy for an unscrupulous lender to pull one on a borrower!!! That's why it's SO important that you have a GOOD REALTOR that has personal contacts to use as lenders and as always: READ THE FINE PRINT and have your REALTOR read the fine print too!