Marc's Mortgage Matter's

According to a news report, a certain private school in Washington was recently faced with a unique problem. A number of 12-year-old girls were beginning to use lipstick and would put it on in the bathroom. That was fine, but after they put on their lipstick, they would press their lips on the mirror leaving dozens of little lip prints. Every night the maintenance man would remove them, and the next day the girls would put them back. Finally the principal decided that something had to be done.
She called all the girls to the bathroom and met them there with the maintenance man. She explained that all these lip prints were causing a major problem for the custodian who had to clean the mirrors every night (you can just imagine all the yawns from the little princesses).
To demonstrate how difficult it had been to clean the mirrors, she asked the maintenance man to show the girls how much effort was required. He took out a long-handled squeegee, dipped it in the toilet, and cleaned the mirror with it.
Since then, there have been no lip prints on the mirror.
There are teachers...and then there are educators. 
 

One industry vet wrote to me about a comment often heard. "All these people know they signed the mortgage documents with the obligation to repay. What's the issue?". "The answer to this question may be that the documents were signed within the long established national agreement of an American free market and that our concept of contract law is predicated on that free market. Now many feel that the government is destroying this free market and replacing it with government mandates and picking the winners and losers, and the whole concept of contract law is on a very weak foundation. The government has to walk a fine line between this and assuring citizens to look to the government as their solution and role model."

Last week I received a note. "I had an idea a long time ago to help stabilize the real estate markets without additional money from the government. It allows certain qualified borrowers who lost their homes to foreclosure in the beginning of the crisis to get back into the market sooner by reducing the time they have to wait to get an agency loan after foreclosure. I would add they should be well qualified buyers with good reserves, jobs, credit histories (other than the foreclosure), etc. This would bring back more buyers to help stabilize the drop and also stimulate the economy in other ways such as I have heard the average home buyer spends close to $6,000 the first year they own their home for things such as window coverings, appliances, furniture etc. Also insurance agents, Realtors, builders, public utilities, state property tax collections etc., would all see benefits from something like this."

Are lawyers and "defaulters" really the ones who will most benefit from the foreclosure & robo-signer issue? Probably - there are huge legal proceedings in the offing, and anyone who is not paying their mortgage can stay in their houses that much longer. As someone wrote, "The one true loser, is the law-abiding, conscientious, tax and mortgage paying middle class American, who is now preparing for TARP 2 as the banks will all almost definitely need to run to the bailout through because of this catastrophe."

Last weeks comment about a plan to help stabilize the real estate markets (by allowing certain qualified borrowers who lost their homes to foreclosure in the beginning of the crisis to get back into the market sooner by reducing the time they have to wait to get an agency loan after foreclosure. I would add they should be well qualified buyers with good reserves, jobs, credit histories -other than the foreclosure, etc.") received some other views. "This is the most ridiculous suggestion I have heard yet (on how to solve the housing crisis and stimulate the economy).  I speak with borrowers daily who want my advice about if they should walk from a property.  These are mostly folks with great credit and no financial hardship. The threat of not being able to purchase another home for years to come is clearly what is stopping this segment of the population from causing our foreclosure numbers to go even higher. I wonder if the person who made this suggestion is one of those loan agents who made a living on pay option arms and subprime loans a few years back?"

Another wrote, "We need a national law that if the borrower passes 180 days of delinquency without a concerted effort to repay, they lose all rights to the property. None of this 'different procedures in every state'."

Remember when Wells Fargo took over Wachovia, wrote down the option ARM's, and thought that was the end of the problem? It wasn't: at least 531 Illinois homeowners will be offered mortgage loan modifications by Wells after an investigation into allegedly deceptive marketing of Option ARM's. Illinois and seven other states investigated Wachovia and Golden West's marketing of pay-option ARM's. Under the settlement, Illinois borrowers will be offered $39.5 million in mortgage relief in the form of loan modifications, including almost $17 million in principal forgiveness. Wells Fargo will also pay $2.2 million to the state to compensate affected borrowers who have lost their homes to foreclosure, to cover the cost of the investigation and to provide assistance to struggling Illinois mortgage borrowers.

An industry observer wrote to me. "Who would ever lend money, if they aren't going to get it back? Would you 'loan' someone $500,000 if they weren't under any obligation to pay it back?" Of course not." Another wrote, "Some borrowers may be asking, and opens up the whole moral question that walk-aways have been dealing with, which is, 'Do I really have to pay for my home (mortgage) if no one knows who owns it?'" Another industry vet wrote, "I really hate the whole whiny bunch of failed home owners. You signed the mortgage, you defaulted. Now go away. If you don't like the rule or law, move to Russia or China."