While job market has begun to show some signs of life and home values have improved, the mortgage crisis and the resulting foreclosure debacle, has caused tremendous damage for workers and homeowners. While foreclosures have fallen from the crisis levels, they have not disappeared. And much like the job market, the most important index of foreclosures is the personal. What matters most is whether your home is involved in one.
The collapse of the real estate market a decade ago did more than make it difficult for homeowners to sell their property. In addition to causing a crash in home values and helping propel the U.S. and world economy into the most severe recession in generations, it left millions of Americans "underwater" with their mortgages.
We all know in cities like Nashville and most of the U.S., a car is essential to anyone who needs to work. Lenders prey on this need, based on the premise that, "You can sleep in your car, but you can't drive your house to work."
The real estate bubble, and the resulting mortgage crisis and financial crash that followed, was driven, to a great extent, by lending institutions that needed product to sell. With the fail of interest rates on investments like Treasury bonds, investors worldwide needed somewhere to put their money that would return a higher interest rate.
Tennessee homeowners who have fallen to difficult times may be struggling to make regular mortgage payments. If the circumstances are anticipated to be temporary in nature, there may be ways to remedy the situation. Homeowners may benefit from consulting with an experienced foreclosure attorney to assist them in negotiating with their loan servicer.
The securitization of mortgages was a very profitable business for many financial institutions. This created a massive demand for mortgages that could be bundled together and sold as a security on the investment market.
By the time the lender has completed all of the necessary steps required to foreclose and sell a property, they are likely to have lost a substantial portion of their loan value. This means, in reality, if they had accepted a principal reduction from a borrower in a Chapter 13, at the end of the day, they may not be economically any worse off and may actually be better off.
The working paper from Federal Reserve Bank of Philadelphia suggests that the bad effects of allowing mortgage strip-downs or cram-downs in Chapter 13 would not be as significant or adverse as the banking industry suggests.
One of the most troubling aspects of the housing bubble was the way in which it affected home valuations. Because homes were seen as a "can't lose" proposition, banks, other lenders and even those securitizing bundled mortgages cared little for the true value of the property. The transaction was what matter and what generated the incredible salaries of many of these individuals.
Tennessee homeowners who are facing foreclosure may be desperate to find a solution. Not knowing how long they will be able to hold off foreclosure in order to provide a roof over the heads of their loved ones can lead to high levels of stress and anxiety. A homeowner recently shared the story of his long-lasting struggle to keep his home.