• News
  • Celebrities
  • Finance
  • Crypto
  • Travel
  • Entertainment
  • Health
  • Others

If We Can’t Stop Foreclosures, Maybe It’s Time to Rent « The Washington Independent

Just as the Obama administration prepares its plan to salvage the financial system and help homeowners facing foreclosure, the debate over whether loan modifications actually work is heating up again.

This is a policy argument in which only one thing is certain: no one involved has any idea what they are talking about. None.

A recent study by the Office of the Comptroller of the Currency says that more than half of homeowners default again within six months of having a loan modified. Housing advocates counter that loan modifications fail if they’re not structured properly, because some lenders merely offer repayment plans that only add to a homeowner’s cost.

The Washington Post wades into the debate today, but it’s been going on for months — ever since pushing loan modifications became the focus of foreclosure prevention efforts. It’s hard to say for sure who is right, mostly because loan modifications are so new there’s simply no good historical data to tell us one way or the other.

It’s not just that we don’t know whether loan mods will work or not, we’re also moving toward doing more and more of them. One financial analyst suggested to me in an interview for a TWI story last fall that the first step in any loan modification effort should be collecting detailed information on what kind of loan modifications are getting done, what exactly they involve, and how they are performing. Short of that effort, it’s going to be hard to tell whether loan modifications are the way to go.

What if lenders modify hundreds of thousands of loans, and house prices fall again, by 10 or 20 percent? That’s not an unlikely proposition. What then? Do lenders redo all those loans? Will homeowners who once again find themselves underwater on their mortgages walk away?

What has struck me in the loan modification debate has been the absence of interest or investigation into the alternative – renting. Some people aren’t going to be able to afford their homes, no matter how many loan modifications they get. Some homeowners simply won’t qualify for loan modifications in the first place. They should be renting. They would probably welcome a chance to get out from under the burden of their homes, and their ruined credit.

If lenders are going to have to take a loss on some loans, what about a “get out of jail free card” for homeowners who can’t be helped by loan modifications? Lenders want those homes out of limbo and in the hands of another buyer anyway, and prolonging the inevitable doesn’t help. Homeowners who are going to end up renting anyway could get some sort of break on their credit history, their delinquent mortgage payments wiped clean, so they could go out and find a decent rental property.

Or they could rent from the lender, if some are willing to temporarily get into the property management business, until a new buyer is found. Keep the house and the lawn up, don’t trash the property, and the lender gives you a clean slate to find a place to rent.

It’s not an ideal solution. But at the moment, there don’t seem to be any other magic bullets out there. So we cling to the idea of loan modifications, even though we have no idea whether they’ll make a difference. In the meantime, we don’t even consider alternatives.

One of the lessons of this crisis has been that the benefits of homeownership have been overblown, and that owning a home isn’t for everyone. So why, as the debate over loan modifications goes on, and the government searches for ways to stop foreclosures, are we desperately trying to keep people in homes they can’t afford, regardless of whether or not they get a break on their loans?

Discussion & Comments (0)

    Recent Articles

    • Things You Should Know about North America

      Things You Should Know about North America

      Get to know more about North America.

    • Eurovision 2010 Paula Seling Unpredictable Contest

      Eurovision 2010 Paula Seling Unpredictable Contest

      Paula Seling's experience on the Eurovision stage led her to declare that "Eurovision is an unpredictable contest". Which may explain the success of the young Lena from Germany, about whom the predictions before the event did not offer much chances for victory.

    • VIPRow.me - The Best Sports Streaming Website Today

      VIPRow.me - The Best Sports Streaming Website Today

      Have you ever contemplated creating a user-friendly site dedicated to sports-related free live streaming channels?

    • Learn How To Download, Install, And Use The Xnxubd 2022 Frame App

      Learn How To Download, Install, And Use The Xnxubd 2022 Frame App

      XNXUBD 2022 Nvidia users are able to watch thousands of videos and other contents online. XNXUBD 2022 Nvidia New is a piece of software that enables people to watch videos online without having to pay for memberships. On a graphics card, the XNXubd also provides some of the best gaming and virtual reality experiences.

    • Xvideostudio Video Editor Apk Free Download For Pc Full Version In 2022

      Xvideostudio Video Editor Apk Free Download For Pc Full Version In 2022

      A new edition of the Video Editor Apk for xVideostudio.Video Studio has all the latest features, including support for multiple video download formats in HD, FHD, and even 4K resolutions.

    • 9 Best Lotion For Masturbation - Popular Choice For 2022

      9 Best Lotion For Masturbation - Popular Choice For 2022

      Masturbation is a common activity for men and women. It's a natural and risk-free way to explore your body, experience pleasure, and release sexual tension.

    • Reasons Why You Need To Stop Watching Movies From Sflix

      Reasons Why You Need To Stop Watching Movies From Sflix

      Without having to sign up or pay anything, you can watch movies online for free with SFlix. It has more than 10,000 movies and television shows.

    • Coi Leray Mom And Dad's Family History & Wife, Explained

      Coi Leray Mom And Dad's Family History & Wife, Explained

      Coi Leray Collins (born May 11, 1997) is a rapper from the United States. Leray started publishing songs to SoundCloud in 2014, and in 2018 she released her breakthrough track "Huddy" as well as her first mixtape, Everythingcoz.

    • Listen And Download Music On MyFreeMP3 For Free

      Listen And Download Music On MyFreeMP3 For Free

      Are you in a bind and looking for a place to obtain free mp3 songs? Never again will you need to bother, since this article has everything necessary to obtain your solution. Download free music from MyfreeMP3.com, one of the world's most popular websites.