Daily Real Estate News | January 26, 2009
Loan Modification Plans Draw Critics
With the estimated number of foreclosures approaching 8 million, it seems like everybody has a plan for modifying mortgages, but no one can agree on which one could work.
One outspoken critic of most loan modification plans is Norm Miller, a professor at the University of San Diego's Burnham-Moores Center for Real Estate. He says he has looked at all the plans and remains unsure that mortgage modifications can really resolve the housing crisis.
Miller thinks that home owners who have lost jobs, died or divorced account for 50 percent of the defaults. Another 25 percent, he says, are a result of resets of adjustable-rate mortgages that borrowers can no longer afford on loans that are underwater.
"There are probably a few million people out there thinking this TARP money is going to help me stay in my house," he says. "We don't want to artificially prop up the process beyond what the fundamentals will support because all that does is delay the problem."
Source: BusinessWeek.com, David Bogoslaw (01/23/09)
