Right now, I own two properties. One that I bought at the height in Westridge, Valencia. One that I purchased last summer in the Saugus area of Santa Clarita Valley. The first, needless to say, is upside down. I owe about 200k more than what it is worth. I turned that one into a rental when we purchased again. I am fortunate enough to have the majority of the expenses cover the mortgage.
Now, we talk about principal reduction. The Robo-Signing settlement is supposed to have 5 of the major banks do some principal reduction. And, about 8 more are going to get hit with something very similar. Now, mind you, it wasn't a huge portion of the 25 billion, but there is a bit that is supposed to go to PR (principal reduction ~ less letters to type). And, these ones are loans that are not backed by Freddie or Fannie......until quite possibly, the next few weeks.
DiMarco, the acting director, has been keeping his heels in the ground against PR. Says it will hurt the taxpayers. Okay, I'm with him there, but really? Isn't every little foreclosure, bailout, credit to bank.....all of the plans in force....ultimately going to cost the people as a whole? You know, the taxpayers?
Okay, so back on subject.....I believe that PR is going to have to happen, I think that's the next best thing to do and I think it should have been done long ago. Well, not in the beginning, but certainly a year or so ago. I believe that it shouldn't just be for people that are in default, people that are struggling, people that are facing foreclosure.
Yell all you want, but I believe that if one is going to get a principal reduction, we all should. I could probably come up with a formula, my major in college was math you know, that would make it appear to work for everybody. But, let's face it, reduce the mortgages on the ones that are upside down and move forward. I think we will have less defaults if the reductions are large enough. I think the banks have made a lot of money on interest in the years prior to someone defaulting and what with all the credits, bailouts, incentives....they will find their way back to the money makers they are.
After all, us taxpayers will pick up the pieces in the long rung anyways....won't we?
Okay, give me your formula!