2 Year Foreclosure Moratorium?
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Today, the MN House will vote on a bill which may allow homeowners getting foreclosed on a little breathing room.
The bill HF2604 would allow homeowners to stay in their homes if they continue to paying their mortgage or at least 41% of their income to the lender. It would also allow renters of foreclosed properties to stay in the home as long as they are paying fair market rent or 41% of their income as well, to the foreclosing lender.
With foreclosure rates still steady, and a lot of ARM loans yet to adjust in the coming years, it’s no wonder there is an outcry from some people to cause a stay of foreclosures in Minnesota. There are some positives for the proposed moratorium, but I am in the camp that truly believes the “market adjustment” is somewhat of a necessary evil.
Some people are not able to make their payments to the bank because of a job loss, death in the family, or divorce situation. These are all very unfortunate circumstances in a person’s life, but part of owning a home is taking the risk that these things might happen and that you may not be able to make your payments.
With a society raised on credit and loans, it’s no wonder we always dream of buying bigger and better things even if we can’t afford it. To be honest, there’s something true about the old saying “if you don’t have the money in your bank account, then you can’t afford it”.
Don’t get me wrong, this is a two-way street. Both homebuyers and mortgage companies screwed up by allowing borrowers to take out too much money on houses they couldn’t truly afford, but this is not about blame.
I’m not here to give anyone a lecture about homeownership or choose a political angle on this issue, but amongst the dark cloud of foreclosures remember that there is a silver lining.
A lot of First Time Home Buyers are able to purchase homes in areas they would not have been able to a few years ago due to the lower prices on these homes. Contractors are able to rehab these properties and jobs are created by the work needed on these distressed properties. And probably the biggest positive out of all this is that (for this generation at least) we are learning our lesson about home prices and mortgage programs. I don’t think we’ll be making the same mistakes we made 5-10 years ago after this market correction is done.
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Comments
I absolutely agree with you. The government has no business getting in the middle of this. Those same homeowners willingly entered into those mortgages. They have 6 months from the sheriff sale to find a new home (plus most banks wait up to 1 year before the sheriff sale).
We need to get this mess cleaned up and behind us, not just postponed.
@Saint Paul Real Estate: Thanks for the note Scott. It’s like a band-aid; just rip it off and get it over with. No need in prolonging the inevitable, which is that most of these people cannot afford these loans.
Steve, thank you for bringing this information to your readers. It will be interesting to hear how the vote goes, and more so, how the mortgage holders will react to the the bill if it does pass.