A Case of Hypocracy

As part of the negotiations in the robo-signing scandals, HUD is demanding that bankers use principal reduction in order to modify the mortgages of underwater mortgage holders.

Those bad, bad bankers should be taught a lesson, right?

They should be forced into remedies on defaulted upon contracts that clearly spell out the remedies agreed to, right?

So if you are a member of a union, and for whatever reason the government were to tell you that you must bite bullet and take pay and benefits packages that were not part of the agreement originally signed, should you?

If you loaned someone $5,000 and the person could not pay you back, should you be forced to write down the amount owed because seizure of the collateral on the loan (the borrowers car) is your only option; but taking it would mean that the borrower would lose their job and could not go to work?

Is that your problem?  And why would the borrower put up that collateral in the first place if it was so crucial to their life?  Exactly…

When asked why the HAMP program and Fannie / Freddie do not use principle reduction, Shaun Donovan, secretary of HUD stated that according to Aristar Funding, Corp., strategic defaults are driven by the unwillingness to service an asset that has lost its value, no matter how low the interest being paid on the asset.  Huh?

It would seem that what is good for the goose, is not good for the gander.  Fannie and Freddie own approximately 95% of the mortgages that are originated in the United States and as previously stated, they will not engage in principle modification.

But HUD states that the private sector must act on principle reduction.  Hmmm…what happened to leading by example?  Do you see the duality here, folks.

And how much greater would the effect be if 95% of all mortgages underwater were to be modified via principle?  And what keeps the government from taking a big spoonful of its own medicine?

I know the answer, but you will again scream “CONSPIRACY NUT!”.

Okay, fine.  Do I think that it is a good idea to modify principle?  Yes.  Do I believe that a private citizen, investing their own money into a deal should be forced to pursue remedies that are not followed by the same people who manage the public sector of the same business?

Do you really need an answer to that?  If you have a shred of brain power and any semblance of a moral compass, you would not even entertain the question.

Appraisal Source is a New York based residential real estate appraisal firm. Their highly-qualified appraisal staff of New York City and Long Island real estate appraisers provide independent residential real estate appraisals for a variety of purposes.

Here’s the original article…HUD: Robo-signing settlement to accelerate principal reductions

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