DS News Article 2/13/10

With tumbling property values leaving nearly a quarter of borrowersowing more on their mortgage than the home is worth, some may find it
tempting to walk away even if they are financially able to keep making
payments – either to get out from under the debt completely or to force
the servicer’s hand for a modification.
Thisidea of “strategic default” has become a universal concern within the
industry, but one New Jersey company says it has a plan to counter such … Continue

Is it going to be another fiasco, similar to loan modifications and short sales disaster, or will it work?
I personally think that principal reduction would be the best incentive to keep people in their homes and the best solution to the problem.
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Comments

  • I agree with Richard. The contracts should be honored and nature will run its course. Don't forget about the homeowners who are doing the right thing and sticking around and struggling to make their mortgage payment. Shouldn't they get rewarded with a reduction as well?
  • I agree. Principal reduction to all underwater mortgages. The reality is that more and more homeowners do not want to honor their obligations and they will walk. Those already foreclosed upon are a problem, which would have to be addressed, too.
  • The only way to solve this problem is honor the contacts that were signed. If they do a principal reduction for one then they would have to do it across the board. Plus what about those who have lost their homes in the first wave? If they started principal reductions I can see some high power law firms starting class action lawsuits. Honor the contacts as is and start the major crash that will happen after all the government band aides start piling off! It happened in the 90's in Southern California and we came out of it just find...
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