Mish's Global Economic Trend Analysis Message Board

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Strategies & Market Trends : Mish's Global Economic Trend Analysis

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To: Sr K who wrote (83756)	8/25/2008 4:39:18 AM
From: Sunny Jim	Read Replies (1) of 116555

<<When the borrower has no equity, if the lender wants to keep the "deal," he has to meet the current market, or you can force the mortgagee to "realize the loss" unless he agrees to a mortgage modification. With a good lawyer or negotiator, in today's market you can get a modification in rate and a reduction in principal in a combination that is better for a lender than a foreclosure and better for the mortgagor than just walking away. If you like where you live, and you know what you are doing, you can stay there under terms that reflect the current market.>> That works well in the current market - you renegotiate to the current market price. Okay, so what happens if the real estate market drops another 10 or 20 percent which is not at all unlikely? All those homeowners (along with a whole lot more) want to renegotiate their mortgages again. It seems like a highly probable vicious cycle but that's what the recent bailout package passed by the Congress could be a setup for IMO.

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