patrick.net

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