Ravenwood - 12/02/05 06:45 AM
In the aftermath of Hurricane Katrinarita and New Orleans flood, many home lenders offered borrowers a moratorium on mortgage payments. They gave homeowners a little time to get back on their feet, but now that the time is up borrowers are crying foul. The Washington Post tugs at the heartstrings with stories of homeowners who mistakenly thought missed payments would be deferred for up to 30 years.
The Gaskells said they thought that meant monthly payments would resume in December, with the three missed payments due at the end of their loan. But last week, they said, their mortgage lender called to say they needed to make all three payments now -- or face late fees and penalties as well as an adverse credit report.That's why you should always keep three months worth of expenses in the bank. Then there's this:
But as the moratorium on payments comes to an end, borrowers, lenders and investors holding the notes are heading into uncharted territory, without clear guidance from the government or a historical precedent for what to do next.Give me a break. If you owe money, you pay it back. If you're unable to pay it back you negotiate a payment plan suitable to both parties. If you cannot reach an agreement you head to civil court, where the law is almost always on the side of the lender. (I'm beginning to understand why banks want these kind of people to get mortgage insurance.) And if a person absolutely cannot afford to get back on their feet, they start foreclosure proceedings. That's nothing new to the lending industry.
It's really quite simple. But for some reason people figure that being hit by a hurricane or flood (as opposed to a fire, earthquake, or any number of disasters) gives them special status.
Category: Left-wing Conspiracy
Comments (8) top link me
Whoops! We differ here, too. Deferred payments should mean deferred payments. Tack on the three payments at the end of the loan period, perhaps adjust the interest to cover the three payment-free months, but asking for the homeowner to pony up three months worth of payments without warning? I'd cry foul too. The lenders should have made it abundantly clear right up front what they were offering, or not offered it.
Posted by: Kevin Baker at December 1, 2005 11:15 PMOn the money. What good is it to recognize that income is interrupted for three months and then demand all three months as if there was no interruption? WTF?
How about tacking on the three month total to the next 24 payments with added interest, as Kevin said.
How about tacking on the three month total to the next 24 payments with added interest, as Kevin said.
There's nothing wrong with that. What part of "negotiate a payment plan suitable to both parties" did you not understand? As long as lenders enter into those agreements willingly, I don't have a problem with it. But when you have the all-knowing, all-powerful government forcing them to do it, that's wrong.
Posted by: Ravenwood at December 2, 2005 7:14 AMI think it is a pretty clear case of where the government interference is both reasonable and neccessary. The lenders had agreed to do something and then for all practical purposes reversed themselves. Greed is not illegal, but breaking agreements is. I think there is a good case for claiming that. If not that, then at least for making misleading agreements.
I'm a bit sick of the uber welfare system that some Katrina victims seem to be seeking, but this seems a righteous complaint.
In my opinion, this whole thing hinges on a reasonable assessment of whether or not the lenders made it crystal clear to the borrowers. Although the deferred payments were a nice offering, if they were at all unclear or misleading in exactly how the missing months are to be paid, then I have to side with the borrowers.
As it is, without knowing exactly how the plan was presented to the borrowers, I can't really side with anyone.
I will say, however, that suddenly requiring 3 months of payments all at once instead of the regular monthly installments doesn't really help much. Either way, you can't really use your mortgage money for more immediate needs, which was presumably the point to the deferred payments in the first place.
On the surface, this seems to me mainly an attempt by lenders to make a charitable "offering" without actually suffering any measurable financial hit.
Posted by: roger at December 2, 2005 10:14 AMLeave it to me to play devil's advocate and be the heartless conservative... I would think that the sheer scope of this catastrophe puts the lenders at hardship too. If you suddenly have a few HUNDRED THOUSAND people stop making their mortgage payment, it's no small task to defer their payments three months, much less 30 years.
This isn't one person deferring their payments, this is thousands. That is a serious interruption in cash flow.
Posted by: Ravenwood at December 2, 2005 10:35 AMGood point on the interruption of cash flow. I just can't figure out why they would have done it in the first place, since the deferred payments, as currently structured, did little to help anyone. As a charitable offering, this one must be measured strictly on the liberal "it's the thought that counts, not actual results" scale.
The lenders would have been far better off just doing nothing differently. It appears that the way this was carried out quickly turned into a lose-lose situation.
By the way, the Universe is on fire today. So much good stuff that I'm getting nothing done at work. Thanks a lot, you heartless, devil-advocating, .50 caliber conservative bastard...
Posted by: roger at December 2, 2005 10:53 AMThe good citizens of NEW ORLEANS should vote ROY NAGIN out of office he has proven his irresponsiblity
Posted by: sandpiper at December 2, 2005 10:58 AM(c) Ravenwood and Associates, 1990 - 2014
