The bill is not a freebie, but would force lenders to renegotiate loans of owner-occupied properties that have been devalued. The way it would work is that homeowner and lender would renegotiate the loan at the property’s present value with the difference from the original loan to the new loan being tacked on at the end of the loan. Basically, we’re talking about a 30-year fixed rate loan with a balloon payment.
To get to this point the lender and homeowner would be forced to mediate. This unfortunately, would further burden a legal system that is already overburdened.
This would allow many to be able to stay in their homes and afford them, especially during our current economic situation. Of course, the homeowner would have to qualify for the new loan, otherwise it would be for naught and just an even more costly mess.
According to Rep. Soto, “What we are trying to do is stabilize the market, we want these people to stay in there homes.”
If this legislation passes both the House & Senate, it would take effect on July 1, 2009. It'll be interesting to see how our legislators react to the bill.
Until next time….Marc It Sold!
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