16 CFR Parts 317 and 318: Mortgage Acts and Practices Rulemaking #542308-00030

Submission Number:
al goodman
Initiative Name:
16 CFR Parts 317 and 318: Mortgage Acts and Practices Rulemaking
I have been a realtor for 17 years in las vegas. considering the enormous amount of foreclosures here in our state, I am finding that once a house is foreclosed and then listed to sell, the house can only sell for the appraised value. One solution to help curb the foreclosure issue is that lenders have the option to work with home owners who are in fact, like myself have good credit and pay on time. It is unfortunate that most properties here have depreciated 50% of the purchase price. Thus many homwowners in this position may choose to walk away from the home as the investment will never come back to its original value. The original value was inflated due to lenders allowing almost anyone to qualify for a stated income and stated asset loans. Often with adjustable rates and a higher interest rate. perhaps if the lenders, on a case by case scenerio would allow these home owners to refinance to the appriased value or slightly higher, then all would be happy. If the lender foreclosures and resells the home, they will only get the appraised value or less considering they will have to pay a realtor commission and customary closing costs, Customary closing costs include escrow fees, recording fees,Title insurance and nevada transfere tax which is .51% of the sales price. Also past due hoa fees and fines, 6-12 months of no payments by the homeowner until the final foreclosure, and perhaps vandalism to the property. These can be huge costs to the lender for refusing to work with a homeowner who may be forced into going into default. Either way the lender loses, why not work with people who are credit worthy? Currently lenders who will modify a homwowners loan, in most cases, will only reduce the interest rate for 5 years. what happens after 5 years? The house may still be worth way less than the appraised value and if the interest rate will go back to where it started, then this only prolongs the pain of owning a home with the original unfavorable terms and the initial principal loan amount. The lenders could also consider if they would allow the home owner to do a "short refinance', refinancing to the current appraised value, a clause could be added to split any future profits with their lender should the home owner decide to sell in the near future. The bottom line is reducing the interest rate and not the principal simply will not work, its only a bandaid prolonging the foreclosure.