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Banks Reduce outstanding mortgage balances in California!
2009 Nov 8, 10:47pm 2,357 views 5 comments
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It is a very slipery slope when and if Banks were to ever reduce a principle balance on a first mortgage. Once you start a policy like that everyone that has a mortgage would want to have their principle reduced too. That's why it never going to happen unless Banks are forced to by law or by a Bankruptcy judge.
In a chapter 13 proceeding, a house owner is allowed to completely discharge a 2nd mortgage balance if the value of the house puts that 2nd mortgage underwater. The 1st mortgage balance can not be touched in a chapter 13 proceeding; either the borrower pays 1st current in the plan or the borrower has to surrender the property.
I hope and pray I can document 1 (one) load principal reduction of any kind. My plan would be to immediately file a class-action suit and have at all of them with all mortgage holders, deadbeats or not demanding a like-kind opportunity to reduce their principal.
Please God, Please. Just 1.
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In an effort to stop the on going process of California foreclourse, dozen's of banks that hold Risky Payment Option Arms loans agreed not only to modify them to fixed rate loans, but to also reduce outstanding principal balances in their loan modifications, so that borrowers can begin building equity in their homes. When one of the banks CEO was questioned about why the sudden shift bank in policy, he said it was the responsible thing to do to save California.
This story is pure fiction, Never going to happen.
This post is in response to the story posted: http://centralvalleybusinesstimes.com/stories/001/?ID=13549&ref=patrick.net
Where in the story they stated:
“If we are to get the economy on solid footing again, California must adequately address the mortgage crisis by preventing avoidable foreclosures and stabilizing the housing market for the long-term,” it says.
It makes two major recommendations for state government action:
Establish a foreclosure process that ensures that mortgage loan servicers carefully review and document their economic alternatives to foreclosures that will keep borrowers in their homes.
Given the large numbers of borrows who are deep underwater, loan servicers should be encouraged to reduce outstanding principal balances in their loan modifications, so that borrowers can begin building equity in their homes.
Like this is ever going to happen. What investor is going to willfully allow someone to modify there investments for the good of someone else? This story is wishful thinking, the holders of mortgages are never going to allow them to be modified where they lose millions if not billions of dollars in profits. The only way this is going to work is if you can give the investors hard numbers where allowing a mortgage to be modified to reduced the principal amount is going to be more cost effective than allowing the mortgage to be forecloused, the former "owner" to be evicted and the house sold at the current market value.
#housing