Trading Down, bringing in Grandma and refinancing—finding alternatives for forclosure

When a family puts it life savings in a home, and then tragedy or loss of a job or any other unforescene circumstance makes it impossible to meet mortgage payments, there should be an alternative to forclosure. Looking at what happens-- in forclosure even the bank looses, since they usually do not get a good price on the forclosed home. And the family has lost not only the home, but the savings of a lifetime and sometimes all its hope for the future.

The banks and the mortgage companies have proven that they are not responsible experts but in some cases no better than rip-off artists. Five years ago a friend of mine left her job as a mortgage broker and started a cooking business. I recently asked her why and she said that she had been under pressure to do immoral things—for example to sell a mortgage of $3,000 a month to a family who could afford $1,000 a month. This she said she would not do and she left the field, even though she had been the basic wage owner in the family for many years, while her husband continued his graduate studies.

When faced with a situation in which refinancing can solve the problem—that should be the first option, and the bank should be a partner in good faith with the mortgage payer—to refinance the mortgage for a longer time and at a lower rate. Right now, in America, banks are getting tax payer money to save themselves—shouldn’t they be forced to save the taxpayers who are in debt to them—for now they are in debt to the taxpayers, aren’t they?

If re-financing won’t work then perhaps there could be a trade-down: that say Mr. J can’t afford his mortgage but he can afford to pay Mr. K’s mortgage –Mr. K can get out of his debt by having Mr. J take over his house and mortage, and perhaps trade down himself to a smaller house, or at least find a rental apartment while having his dignity and his savings restored to him. And Mr. J’s house can be taken over by someone in a higher income bracket with a similar problem with his mortgage. But you say there still is the house left on the top, left by the family who takes over Mr. J’s house. Well maybe the banks can use some of the taxpayer money they received to swallow the loss when that house is sold by Mr. J at a lower price and both Mr. J and the bank receive some compensation. The banks should not be considered demi-gods while the rest of the population are expected to bow down to all their concerns.

Another possibility is re-zoning for two family homes or even three family homes if necessary. For many years families had financed their home by renting to others. Many a too big home could be divided into a two family house and the mortgage payments would be far less of a burden with this income hopefully coming in every month. Having grandma back in a small apartment where she can be independent is another option, since anyone who knows about nursing home care knows that there is much hidden abuse of seniors. And the fancier senior centers are often too expensive for the average family to afford. It could be much less expensive to have a visiting nurse service and privately provided caregivers when necessary. And the advantage of having grandparents around children is very real. Small children and teenagers could benefit trememdously from having another generation’s opinion to widen their view of life. That was the way of the world until very recently and still is the way of many people all over the globe.

Of course I’m no financial expert, but reading the news that term is now an oxymoron—a contradiction in terms. If there really were financial experts-- the world wouldn’t be going downhill today. It’s the experts in government and industry and commerce who arrogantly called the tune and the little people trusted them and followed, not knowing that it was the pied piper's tune.

So I’m putting out another blog entry that few will read, but if one reader can be inspired to think of some better ideas, to refute me in a positive way by coming up with more practical or do-able solutions, then this won’t be written in vain.

And just a little word to all those bankers: G-d does not look kindly on those who cause grief to widows and orphans, or to the poor. If you only care about your bottom line baby, you will fall on your bottom—your ass will eventually be on the line too.