Tuesday, June 1, 2010

'Underwater' homeowners strike back

Just returned from a weekend wedding in the Seattle area. Nothing much has changed. The oil still gushes into the Gulf Of Mexico, Israel violently stops a flotilla of aid bound for the Gaza Strip, and Bend's cool, wet spring drizzles on.

Also, the New York Times finally catches up to a story that's been percolating for awhile: Homeowners are getting even with banks on their "underwater" mortgages where they owe far more than what the homes are worth.

Homeowners who are swamped with savings-draining mortgages are doing what banks would do: stop paying the mortgage. I know of someone in Bend who did this for months until their bank woke up and lowered their monthly mortgage by $800.

It's how you get the attention of banks. Talking, reasoning, negotiating with banks doesn't do much. When that monthly check stops coming in, the banks snap to attention. But, it can take them up to a year or more to realize you're not paying your monthly mortgage. This can allow you to save some money. This will help the overall economy because it puts more money into consumers' hands.

And, the banks don't want to be saddled with scores of foreclosed homes because they live for the short-term profit and those homes won't sell at a profit, if at all, for years. So, the next best thing is to take less money from the homeowner. While it means banks won't be as profitable, it does mean that they get some consistent revenue. It keeps people in their homes, stabilizes neighborhoods and helps the economy get back on track.

The lowly homeowner does have some power afterall. Seize it.

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