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View Diary: Ending the Flood of Foreclosures:  Reform Financial Regulation (132 comments)

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  •  Ms. Brunner, I'm probably going to lose my house (15+ / 0-)

    it's been underwater since fall 2007 when we first tried to sell it.

    I don't qualify for any government aid because I had to move out of that house and rent it out for half the mortgage payments, and landlords don't qualify for assistance.  Which, whatever, I guess they have to draw the line somewhere.

    But what I think would be very helpful for people in my situation and throughout the country is some sort of legislation forcing banks to give unsecured loans to allow people to sell their underwater houses.

    I had a buyer lined up back in '08, but the offer was $35,000 short of what I owed on the mortgage.  The bank would not allow me to short sell the house.  And when I applied for a loan from that same bank who gave me the crazy mortgage loan a year before, they denied me.

    I think that if banks are mandated to cover the 10-30% drop in housing prices to allow people to sell their overpriced houses, it will do two things:

    1. the housing market will gain some sense of sanity, because right now there are so many foreclosures that people who need to sell can't and people who want to buy are afraid to.
    1. Banks will lose out in the short term, because for some strange reason unsecured loans are worth "less" than secured loans, but win out in the end because they won't be buying back their own overpriced houses in foreclosure sales.

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