There is quiet talk of an agreement by which bank will only pursue a certain number of foreclosures a month. While this may seem to be a wonderful idea on its face, here is the dark underbelly that waits. When a bank has 100 options that they can pursue for forclosure and only 10 forclosures that they can pursue and still stay under their cap, what do you think happens? I can tell you for sure. I have noted that the property on which foreclosure happens the most readily is the property that is similar in value to the remaining outstanding mortgage value. Sometimes this means that the property was purchased at a good value, but all too often it means that the property has had a significant portion of its mortgage paid off, or a significant amount of money was put down on the property from the start.
Those that found a good value have lost little, but those that put their whole savings into their new home or have lived in their home for 10 years and find that their mortgage has been foreclosed after only the minimum amount of time; this situation is devastating. In many cases, these individuals have never missed a payment before losing their job and/or have absolutely nothing to fall back on. My heart goes out to these victims. However, the banks are literally forced into this behavior by a secret policy that gives them no alternative. They cannot practice foreclosures fairly and this method certainly suits their best interests.
I have seen for myself, these unbalanced practices and could not figure out why this was occurring until a friend (that works for a bank) told me of this policy. I can certainly see how this is supposed to help, and I know that for some, it is. But before there were so many foreclosures to pursue that they were all given a cushion period to come current on their debts. Now only the homes that are in the worst distress
and will eventually be subject to foreclosure once their current occupants figure out how under-water they are, are being given any leniency at all.
For this reason alone, this policy is pure garbage. I can appreciate the intent, but the outcome is worse then the initial problem.
Can we please get the out of our businesses? Just sit back and steal your taxes. Do what you can with those, but leave things that you cannot possibly understand alone! The banking industry is not broken, but the government's attempts to make it altruistic certainly are.
Sunday, January 24, 2010
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