What should be done with the many loans going into foreclosure? Should the loans be allowed to fail (meaning, homeowners lose their homes and neighborhoods become unstable); should the government step in and make new loans to these same people, maybe low, fixed-rate loans – forcing banks to write-off the differences between what is owed and what the properties are worth, now, or maybe have the federal government pay the difference?
I don’t know.
I do know I was not surprised when I read the following, in a story in today’s Globe. The article was about how foreclosures have tripled in “the region” (ill-defined), but included a tidbit of information about how programs to help those in trouble have had limited (I’d say, no) success.
The Home Saver Program, a $250 million loan pool made available by the state last July, has so far made only six loans, totaling $1.5 million, according to MassHousing, the state’s affordable housing bank.
Six? SIX????
(Which means each home loan was for an average of $250,000.)
Bottom line? I think, almost all the time, loans heading into foreclosure are goners.
Yet, there has been so much conversation about “foreclosure moratoriums” and “borrower bailouts”.
That just doesn’t seem practical.
Does it to you?
The Globe article focuses on one person who took out a loan – an adjustable-rate loan – and cannot afford to make her loan payments, any longer.
But, she can’t afford it, not just because it reset, but because “business at her restaurant also declined,” and, the article states, “her 21-year old son is unemployed”.
Well, how do you save someone from losing her home if she doesn’t have the income to pay her loan, no matter its rate?
Source: In one year, foreclosure rate tripled / Cities taking action in a bid to prevent blight – By Kathy McCabe, The Boston Globe
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