Mortgage Freedom through Foreclosure
Politicians, lenders and the economically concerned want to put a halt to foreclosure. But if homeowners really want relief, then they ought to let their home be repossessed.
With the impending doom of unmanageable loans, inflated properties and, unstable and unpredictable employment, accepting defeat against foreclosure would reboot the troubled homeowner’s finances.
Foreclosure may get credit scores low, but it can be saved.
Regressing to sustainable renting may be better in these tough times.
Foreclosure could help the credit market, with securitization unsuccessful. Cutting down mortgages into bundles made asset classes with different interests in a dissolution strategy. Senior bundle holders can do modifications, but not juniors. Lower bundles are of little worth and are even legal hindrances for sales.
It is best to start clean by surrendering to foreclosure.
More homes are repossessed than sold. Home prices are falling along with new home constructions. With more homes stagnant in the market, there will be no demand for new homes.
It is said that lethal financing ended early 2007. By summer of that year, 100 percent financing, negative payback option ARMs, piggyback seconds and no-income no-job no-asset loans are no more. Real estate purchases were then financed by stricter loan guidelines. This is where ends meet up. If default rates of late 2007 loans are lower than 2004 to early 2007 mortgages, this confirms a turning point.
Main Street and Wall Street believes that foreclosure may establish recovery. As weak owners give up to repossession, assets transferred to smarter owners. Plus, the foreclosed homeowners of today are homebuyers of the future.
Credit flow changes are not all about money. It is about beginning a clearly guided and reliable lending system with reasonable standards and product which investors will definitely buy.
Then there is loan modification, and it is bad. Modification forces the foreclosure-troubled to rescue an overvalued home. This is predatory lending that creates more mortgage slaves.
