I read this today on HousingWire. Its publisher, Paul Jackson, poses the following “provocative” question about all of those modification plans and programs we keep hearing about (and I often write about):
[W]hat if ‘extend and pretend’ within our nation’s troubled mortgage markets is actually providing a lift to consumer spending?
Or, perhaps it can be said like this: what if consumer confidence statistics are actually being artificially buoyed by the extra cash homeowners (at homeowners ‘on paper’) who are not making mortgage payments, but instead, allocating those resources to things they would not otherwise purchase?
I will often advise my clients who are considering bankruptcy to stop making credit card payments.
But miss a mortgage payment? The consequences here are now so far off into the future and so vague, and layered under numerous government assistance programs, that any future penalties are tough for a consumer to accurately assess when faced with making a choice on how to best manage their debts. (I’d even argue that for many consumers, given the current environment, it makes logical sense to default on their mortgage first.)
It actually might make some logical sense… assuming there’s a goal. And bankruptcy for me has always been about a client’s goals… so I was happy when he noted this important observation:
[W]hat happens when these people eventually find themselves, at some point in the future, saddled with rent or a mortgage payment?
It is going to happen, and it’s a fact I point out to my clients. Some have answers. Some have answers that actually make sense. Some have no response to my question at all.
And when I hear no response to that question, I am very concerned for their future. Mr. Jackson suggests we should all be concerned about their future – as well as our own. And it’s for that reason why I think this article is worth sharing:
Related posts:
- ‘Extend and Pretend’ Doth Not A Modification Make
- Displaced Katrina Homeowners Not Getting Promised Mortgage Relief
- State of the Union Decompression: The Whole Mortgage Modification Thing
- Short Sales & Foreclosure: Perception & Reality
Tags: Commentary, Economy, HAFA, HAMP, modification, Modifications and Workouts, mortgage, Mortgage and Foreclosure, mortgages, Mortgages and Foreclosures
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