Thursday, September 30, 2010

On one hand, I think banks seeking foreclosure ought to have their papers in order...

On the other hand, many homeowners now facing foreclosure should never have been able to buy their home in the first place... so I'm not thrilled about their using the legal system to stay in the house and, even worse, without having to make any form of mortgage payment while the process plays out.

So... I am going to present a common sense compromise. Any one who lied on their mortgage applications or bought a house with no money down or made less than a handful of payments before defaulting on their mortgage doesn't get to avail themselves of the legal protections that should be limited to those who otherwise played fair. Nor should anyone who could afford to make their payments but is simply choosing not to (usually because their house is worth less than the mortgage, the so-called 'strategic defaults') be able to hide behind the technical rules governing foreclosure.

If, on the other hand, you are didn't lie on your mortgage application, you made a downpayment of at least 10% of the purchase price and you made your payments for a good while before falling victim to whatever trouble has left you unable to keep making your payments, then the bank has to make sure every last 'i' is dotted and every 't' is crossed before they get to kick you out.

In other words, if you screwed the lender when buying your house or if you're voluntarily screwing them now, the bank gets to do the same to you. And if you played fair, then the bank has to do the same.