I have no problem with Loan Mods as it pertains to adjusting an interest rate, or term, or forgiving late payments. But the idea of a “principal reduction” enrages me beyond belief.
I have no trouble hearing about a 30 year being turned into a 40 year, or adjusting an interest rate for someone who might not qualify for a refi purely on the current standards, to help them stay in a home that they truly intend to live in. If someone is layed off due to no real fault of their own, and a bank saw fit to float them 3 months or a year of missed payments (tacked back on at the end of course), then I’m ok with that also.
But to simply say that a house you bought for $500K, you now only have to repay $300K, when you could never afford $500K in the first place, especially given that the taxpayers are generally footing the difference, makes me want to literally go postal on Capitol Hill. What in God’s name makes any policy maker or bank exec think this is a good, fair idea?
Oh yeah, those loan mod outfits, many of them are shams and thiefs and former Johnny come lately mortgage brokers who are now stealing peoples money on the back end, instead of the front end. The clients who use those loan mod services are almost universally the ones who never read their loan contracts in the first place, thus letting themselves get into the mess by trusting others without doing any homework. The whole loan mod industry is a crock, designed purely to take advantage of the lazy and stupid.
