If A Bank Is Threatening To Foreclose On Your Home:

Congresswoman Marci, an attorney, advises her constituents about what to do in the event a bank is threatening to take your home.

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Comment by C.B. "Cork" Motsett on March 2, 2010 at 8:20am
Not knowing you have a sub-prime loan is hard to believe. I've purchased multiple homes going back to 1969 (yes, I'm old but I also purchased my first home when I was 20). Point is, the type of loan, interest rates, conditions, etc. were always discussed at closing. In more recent years we've had the Truth in Lending Law which requires the purchaser/borrower to sign a separate document that spells out the type of loan, conditions, etc. and includes the exact amount of interest that will be paid over the life of the loan (as it is documented at time of closing).

Ignorance can not be a legitimate excuse. Period. For those who purchased homes beyond their means and who took the risk associated with a variable loan they must bear the fruits of their decision/choice. (Many of these should now say: "Thank you ACORN", "Thank you Congressman Frank and Senator Dodd".)

Having said that, their is another group of homeowners who need to be considered. These are the ones facing foreclosure who have extenuating circumstances such as legitimate debilitating illness, injury, loss of employment, etc. that are Beyond their CONTROL (as opposed to being fired, quitting, malingering, etc.). There needs to be another option for them during these difficult days. Breaking the law should not be a requirement nor should lenders be forced to accept a loss of their capital.

The basics must still prevail. The lender must be able to prove their right to foreclose. The borrower has a legal and moral obligation to pay their debts. Some form of compromise to get through the short term would appear to be in every-one's best interest. Perhaps simply continuing to add interest during the period when payments aren't possible into the total amount owed is a reasonable alternative. When the borrower is able to restart payments the total amount due would be recalculated and a new payment schedule created with the time period and payment amount negotiated between the lender and borrower.

It's not in the banks interest, or of those property owners of surrounding property, to have a glut of foreclosed homes. Every foreclosure lowers the surrounding homeowners property value when the foreclosed property sells at a highly discounted rate. Lenders who carry the risks on those mortgages are placed at even greater risk of foreclosure of these surrounding properties. It's vicious circle with a "Catch-22" response as the current best recourse.

A reasonable alternative to foreclosure needs to be developed that protects the lender and homeowner alike. Throwing families on the street is not a viable solution. If they can't make their mortgage payment what chance do they have of making their rent (assuming they can be accepted and have the money for the down payment and damage fee most apartment owners charge new tenants).

"Catch-22" truly is an apt description of our current real estate law,

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