There was proposal among the States Attorney Generals to settle claims against the five major mortgage lenders including Bank of America, Wells Fargo, CitiMortgage and others where they would have been required to begin granting principal reductions as part of the mortgage modification process. This is part of a proposed settlement agreement as part of a lawsuit filed against the lenders for their failure to grant modifications, as well as the improper mortgage foreclosure processes which have been going on around the country. As expected several Republican Attorney Generals and several Republican Congressman and Congresswomen objected to the proposed requirement to grant principal reductions. In a ludicrous statement, Bob Davis, an executive with the American bankers Association, the trade group representing many of the lenders and taking positions adverse to homeownership stated that principal reductions do not work.
Here at the Cressman Law Firm, it is my firm that while this position "does not work for the banks" it will help most homeowners remain in their homes. As it now stands, most homeowners have no incentive to remain in their homes and take stock in their communities. Ask yourselves, "Would I pay XX dollars for a home which is worth significantly less than the XX dollars the loan the bank is asking me to reaffirm?" In most cases the banks demand that borrowers carry the burden of keeping the principal balance at the current amount and only lowering the interest rate, and in many cases extending the terms of the loan, etc. In the end, borrowers will end up paying more for the home by paying back loans which are higher than the value of the homes, for longer periods of time. Why would anyone pay double the price for anything and then agree to pay interest on the loan for a longer period of time. Let's face it. Property values will NEVER return to pre-bubble burst values. The only ones who made money were the realtors, mortgage brokers and unscrupulous lenders who handed money out as if it were candy on Halloween night. prices became inflated and banks and appraisers and lenders and brokers kept telling us the values would continue to increase. Enough said.
The ones left holding the burden are the homeowners who are far more than their houses are worth. And now the banks want those same homeowners to bear the sole cost of fixing the problem. Granting principal reductions does make sense. It makes sense for everyone involved, the homeowner and the lender included. If your lender is refusing to grant a principal reduction and your homeis worth far less than what you owe, bankruptcy may be an way out. Surrender your home to the bank and let them have the headaches of trying to sell it for what is owed on the home. They never will and maybe someday they will look back and say Mr. Davis was wrong and they should have granted principal reductions to provide incentives for people to remain their homes. As it now stands there is no incentive.
If you think bankruptcy may be an answer for you, call my office at 407-877-7317 and schedule a free no obligation consultation to see if bankruptcy may help you get a Fresh Start On Life and Begin the Road to Recovery.
Federal Law requires that I provide you with the following notice: "My office is a debt relief agency. I help people file for bankruptcy relief under the U.S. Bankruptcy Code."
The Obama administration has recently made several refinancing and loan modification programs available to help families avoid foreclosure and stay in their homes.
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