Saint Paul, Minnesota (RFN)February 24, 2009
By Marty Owings
I got an email from Congress.org and the title was "Should Bankruptcy Judges Be Allowed To Reduce The Principal Owed On A Mortgage Loan?" And that got me thinking about this whole issue.
When times were good and our home values was increasing by 10% to 15% a year many took out equity loans or sold and bought bigger houses. In other words many Americans reaped the rewards of an inflated housing market and cashed in.
Our cities, states and federal government benefited in the form of higher tax revenues. We all got richer when our real estate values were increasing. Then came the housing crash and all that came to an end. Now our homes are losing value, the taxes collected are down, although not as fast as they went up, and sadly Americans have lost their homes altogether.
I can't say I would turn down the offer to lower my mortgage, I can't even say whether this is good for the country right now or not, but I do know that something about this doesn't quite feel right. In a way its as if we're all collectively participating in a children's T-Ball game were scores aren't kept and no outs are counted until everyone bats.
If you owned a home during the boom, you reaped the rewards. If you took out an equity loan to buy a boat or new car you reaped the reward. If you paid of debt or took a vacation, you reaped the reward. And now, when we're losing our homes value we want to continue to reap reward.
Yeah, I know, if you're facing bankruptcy you want to try to keep your home if can and if lowering you're payments can help, I understand. However, shouldn't you have to pay this back if the market turns around and your home starts to increase in value again? Shouldn't we be obligated to return the favor?
I know its not popular to say this, but banks will lose money. Money that belongs to you, me and other investors. Even if the Government steps in, its still your money or the money of your children. I know these are tough times and we need help, but we need to be fair and honest about it. In the end, its an individual decision and one that you have to make based on your situation and your conscious.
In the meantime, you can let your Representatives know what you think about this idea.
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