Which is Worse: Insolvency or Foreclosure?
"""The frequency with which homeowners inquire whether bankruptcy or foreclosure is worse. It is almost as if someone performed a cruel joke on us in 2007 by placing us in a time machine with the dials set to October 1929.The Mortgage Bankers Association anticipates close to 2 million foreclosures in 2008 due to the rise in delinquencies and foreclosures for prime loans. We are all too aware that the problem is not solely caused by the oversupply of homes and the fact that homeowners owe more than their home is worth. This issue is exacerbated by massive employment losses in markets such as Michigan, Florida, Indiana, and California.What can banks do or say to assist householders debating whether bankruptcy or foreclosure is worse? Before this situation spirals out of control, there are a few things that all customer-focused institutions can do to assist homeowners in navigating these challenging times when their finances appear to be falling apart.1) Banks may waive late fees and penalties once payments are deemed to be late. When struggling homeowners are attempting to make their mortgage payments despite challenging circumstances, it is time for banks to reconsider eliminating the 4% penalty built into most loans.2) In order to reduce monthly payments on existing loans, financial institutions should also seek to extend loans as much as feasible. This would make life simpler for the numerous individuals whose delinquencies are attributable to income loss or reduction.There would be a win-win situation not only for banks and homeowners, but also for the millions of investors who are losing enormous quantities of money on non-performing mortgage-backed securities if the majority of banks proactively modified existing loans to reflect the aforementioned recommendations.Such adaptable and customer-centric strategies would also encourage a greater number of borrowers to remain in their residences despite declining market values. At the very least, it would mitigate the impending catastrophic losses that have been predicted.What of homeowners? Exists anything they can do to assist themselves? Rather than merely pondering the relative merits of bankruptcy and foreclosure, they should consider an alternative solution. Rather than waiting for banks to take the initiative, those with some equity in their home and a reasonably good credit score can implement the Financial Safety System's strategies. Ultimately, the strategy saves householders tens of thousands of dollars in mortgage interest, improves cash flow, and allows them to own their home free and clear sooner.The best aspect of the strategy is that it does not require any changes to the family budget or additional payments in the conventional manner. With only an interest-only second mortgage or a low-interest credit card, homeowners are well on their way to implementing the most effective equity-building strategy ever conceived. With this strategy and the proactive customer-friendly approach that banks can employ, the destination set on the dials of the time machine need not be the 1930s. This is especially true when householders realize neither bankruptcy nor foreclosure is necessary to escape a financial bind.
" - https://www.affordablecebu.com/
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"Which is Worse: Insolvency or Foreclosure?"
was written by Mary
under the Finance / Wealth
category. It has been read 90
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comments. The article was created on 02 June 2023
and updated on 02 June 2023