I was raised with traditional values and taught that good credit is essential to good character. Until age 50 I was never a day late on any payment.
Now I am facing foreclosure. My character has not changed but my income dropped 50%. Five years ago my home appraised for $350,000 and I qualified for a $280,000 loan. Today my loan balance is $275,000 and my home is worth, maybe, $235,000.
My lender rejected my request for a discount of my loan balance. But if I were to sell my house to avoid foreclosure, the lender might give the purchaser a big discount on the loan payoff under a "short sale." Lenders often take a $50,000 to $100,000 hit on this practice.
My family has been living in our home for six years. We love our house, feel safe in the neighborhood and appreciate having good schools for our children.
Doesn't it make more sense for a family to stay in their home, providing that the family suffering from a hardship can make the same payments after the reduction, than for a new buyer, on a short sale, to benefit at the family's expense?
There is a recent U.S. Supreme Court decision that blocked an attempt of a Florida homeowner to force a lender to discount their loan as this would compromise the integrity of the lending industry. Lenders would be reluctant to loan money if the courts could force a discount, the high court said.
It is an outrageous practice on the part of banks and S&Ls; that families get tossed on the street while "short-sale" buyers get the discount that should go to the family in hardship cases.