What Constitutes a “Responsible” Homeowner?

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Today in the newspaper I read that President Obama wants to pursue relief for “responsible homeowners”. Could just be election-year rhetoric, however, who is to judge what is “responsible”?

Common sense may dictate that responsible homeowners have:

  1. made their mortgage payments on time every month
  2. NOT used their home as an ATM machine to buy new cars or boats or ugly jewelry or trips to Barbados
  3. actually READ their loan papers when they signed for their mortgages

In two short sale scenarios with seller clients this past week, the lenders stated that the sellers “do not meet the investor’s criteria for imminent default” of their mortgage.

Wait a minute here. So, our clients have been working diligently to save their money, have NOT made frivolous purchases while being homeowners, and now when they’re honestly and truly under-employed and half of the married couple is out of work, they’re not given relief?

Must they be nearly broke to be granted a short sale right off the bat? Must being responsible invite punishment in the form of nobody offering to help them until they’re further distressed?

What is the incentive to BE responsible when so many homeowners are feeling punished for BEING responsible?

Initial turn-downs are common in short sale negotiations when the sellers are on time with their payments. It’s when the mortgage payments are NOT being paid that we often see lenders ramping up to make the short sale happen favorably for all parties. However, homeowners must consider the credit implications of being behind on mortgage payments…

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