Despite all the stories about foreclosures and people just walking away from their homes because they can’t afford the mortgage payments, there are plenty of responsible homeowners who are not delinquent in their payments.
Plenty of homeowners did not overextend when they purchased their homes and have been making their monthly mortgage payments on time. Or, if they do have an interest-only or adjustable rate mortgage, many were told at the time of closing that refinancing in the future would be easy.
However, these responsible homeowners are now facing tougher banking restrictions when it comes to refinancing their mortgage loans, especially if they owe more on their mortgage than their house is worth.
Many lenders are refusing to refinance underwater mortgages — loans that are higher than the value of the home — because it would mean big losses for them if the borrower defaults, said Mark Zandi, chief economist for Moody’s Analytics.
The strangest twist: lenders prefer to wait until homeowners are in default before reviewing a loan modification.
So much for rewarding the responsible homeowners who are trying to do the right thing by NOT going into default.
Read the full story here.
