Workouts could be good option instead of foreclosure on clarkhoward.com

There's currently a move in Congress to put a moratorium on all foreclosures. This is, of course, a direct result of our government's recent "bail out the rich investors" mentality. Since we bailed out the big guys like Bear Stearns, Fannie Mae, Freddie Mac, etc., shouldn't we do the same for the little people?

That kind of moral equivalency troubles Clark. After all, if someone is paying their bills and staying in a home, why should another person get to keep a home if they're not making mortgage payments?

The penny-pincher instead advocates workouts (aka cram-downs). That's where you sit down with your lender and come up with a new financial plan that allows you to meet your mortgage obligations. It's done all the time in commercial real estate.

Clark's advice is very timely advice considering the latest August numbers show that foreclosures have hit another record high.

Everyone wins when a compromise is reached. Think about it like this: The lenders don't have to spend money to foreclose and pay to maintain a property; the neighbors don't have to take a hit on their home value when there's a foreclosure in the 'hood; and the homeowners get to stay put.

What others are saying

Comment by Matt
In case you missed it, there are people with real time issues that developed long after they bought a home. I dont know if you realize it or if you had your head in the sand for the past year but layoffs and job losses are very high. Tell me, could you pay your mortgage if you got laid off? What about the guy that has struggled all his life and finally had an opportunity to own a piece of the American dream because of the advent of the option ARM loan? After all, the brokers promised at this rate of appreciation, in 3 years you can sell the house for a profit and use the proceeds to put down on another house. Not everyone is as savvy as you may think you are. In the meantime, a bailout will help prevent more foreclosures and keep YOUR home value from further eroding. Or you can continue this assinine tough guy stance of yours and continue the foreclosures. While you are at it, you may also continue watching your home suffer in the process. Bail them out. It will help us all.
By Shawn @ 09/16/08 01:00:31 PMreport abuse
Bankruptcy
I'd be against bailouts if they hadn't made it harder to declare bankruptcy. That would punish all the morons, lenders and borrowers alike. Instead, the government decided to squeeze the little guys by forcing them cough up money for corporations when they should have declared bankruptcy and that bad black mark on their credit reports. Anyone who doesn't think that BOTH lenders and followers are at fault here are bloody idiots. Predatory lending? Yes! Fraudulent borrowers? Yes! Not one or the other...
By Medical Student @ 09/15/08 06:00:25 PMreport abuse
foreclosers
As a realtor for over 30 years i have never been able to figure out why a bank forecloses on someone when if they would work with them many times as the after the borrowers financial crisis ends they would be able to make whole payment.. when a lender does foreclose they loose much money and the holding time it just does not make sence
but i have seen that most of the asset managers are smart mouth lazy could care less agents that could care less and if you call them they are made they have to work
By jack @ 09/13/08 06:01:01 PMreport abuse
No More Bailouts
I say foreclose already on these deadbeats. Let the banks who were stupid enough to loan money to people with bad credit and a history of not paying their bills on time eat the loss.

Those of us who were responsible in our housing and mortgage choices have had heard enough already about bailing out these losers.

Next time, let them struggle and scrimp and save to buy a house like I did. In the meantime, throw them out into the street already and tell them to start renting.
By Matt @ 09/12/08 04:28:04 PMreport abuse
Creeping Socialism
Sorry Bubba, but debts are eventually paid by someone, there IS NO FREE LUNCH. All this happy-talk about saving the "little people" from the woes of foreclosure is just a smokescreen to get Uncle Sam to help out the big banks and their fat cat investors. They want us taxpayers on the hook for the bum mortgages and so far they've managed to pull off one scam after another. Since when did it become a good idea to convert private debts into public debts?

The fact that Clark Howard even suggests these Enron-like schemes are legitimate shows how far we've gone down the path towards socialism in this country.

Come on Clark, grow a pair and stop backing this nonsense! We all will be better off when these debts and the bad actors are cleansed from the financial system.
By Jeff @ 09/12/08 03:47:59 PMreport abuse

Comment by Matt

In case you missed it, there are people with real time issues that developed long after they bought a home. I dont know if you realize it or if you had your head in the sand for the past year but layoffs and job losses are very high. Tell me, could you pay your mortgage if you got laid off? What about the guy that has struggled all his life and finally had an opportunity to own a piece of the American dream because of the advent of the option ARM loan? After all, the brokers promised at this rate of appreciation, in 3 years you can sell the house for a profit and use the proceeds to put down on another house. Not everyone is as savvy as you may think you are. In the meantime, a bailout will help prevent more foreclosures and keep YOUR home value from further eroding. Or you can continue this assinine tough guy stance of yours and continue the foreclosures. While you are at it, you may also continue watching your home suffer in the process. Bail them out. It will help us all.

By Shawn @ 09/16/08 01:00:31 PMreport abuse

Bankruptcy

I'd be against bailouts if they hadn't made it harder to declare bankruptcy. That would punish all the morons, lenders and borrowers alike. Instead, the government decided to squeeze the little guys by forcing them cough up money for corporations when they should have declared bankruptcy and that bad black mark on their credit reports. Anyone who doesn't think that BOTH lenders and followers are at fault here are bloody idiots. Predatory lending? Yes! Fraudulent borrowers? Yes! Not one or the other...

By Medical Student @ 09/15/08 06:00:25 PMreport abuse

foreclosers

As a realtor for over 30 years i have never been able to figure out why a bank forecloses on someone when if they would work with them many times as the after the borrowers financial crisis ends they would be able to make whole payment.. when a lender does foreclose they loose much money and the holding time it just does not make sence
but i have seen that most of the asset managers are smart mouth lazy could care less agents that could care less and if you call them they are made they have to work

By jack @ 09/13/08 06:01:01 PMreport abuse

No More Bailouts

I say foreclose already on these deadbeats. Let the banks who were stupid enough to loan money to people with bad credit and a history of not paying their bills on time eat the loss.

Those of us who were responsible in our housing and mortgage choices have had heard enough already about bailing out these losers.

Next time, let them struggle and scrimp and save to buy a house like I did. In the meantime, throw them out into the street already and tell them to start renting.

By Matt @ 09/12/08 04:28:04 PMreport abuse

Creeping Socialism

Sorry Bubba, but debts are eventually paid by someone, there IS NO FREE LUNCH. All this happy-talk about saving the "little people" from the woes of foreclosure is just a smokescreen to get Uncle Sam to help out the big banks and their fat cat investors. They want us taxpayers on the hook for the bum mortgages and so far they've managed to pull off one scam after another. Since when did it become a good idea to convert private debts into public debts?

The fact that Clark Howard even suggests these Enron-like schemes are legitimate shows how far we've gone down the path towards socialism in this country.

Come on Clark, grow a pair and stop backing this nonsense! We all will be better off when these debts and the bad actors are cleansed from the financial system.

By Jeff @ 09/12/08 03:47:59 PMreport abuse

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Sep 12, 2008 -- Workouts could be good option instead of foreclosure

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