Wednesday, August 25, 2010

Pretend and Extend

Pretend and Extend

Pretend and extend has been the game of the federal government and the banks for several years now concerning the housing market.  It's not unheard of to meet home-owners who have been living in their home RENT FREE for over two years.

But this pretend and extend game has encompassed even those home-owners who have stopped paying their mortgages long ago.  The real game is being played with people lives, emotions, and families.  These so called modification programs which were originally designed to help home-owners stay in their home has FAILED.  The plan was to modify their loans to affordable levels to keep the home-owner from walking away or short selling their home (short sale).

In my opinion, the home affordable modification program has failed.  The biggest reason is that the modification does not reduce the principal balance of these loans.  This is crucial to fix the housing market as most of these homes will still be in the red a decade later.  Think about that for a minute.  There is a large chance your home will still be in the red (negative equity) a decade from now.  Who likes to throw good money at bad?  Not you I hope!

Banks and the federal government love the Pretend and Extend game.  Here's is why:

1. Banks are slow to foreclose and even during modification (HAMP), they are asking for some monthly money.  They don't show a loss on their books so that really misleads the public who thinks this housing market is turning around.

2. The less they foreclosure, the less homes are on the market.  This prevents homes from losing more of their value thus causing a more sever downward spiral on home-prices.  Agents who list bank owned properties are notorious with playing with people's time and money. 

3. The government who in my opinion, has forgotten to govern.  I don't understand why they are encouraging people to apply for failed modification plans which they know that the whole system is a plow to pretend and extend.

Listen, if you've tried to modify your home-loan and find yourself running around in circles with lost paperwork, failed modifications, failed promises, rude and disrespectful bank employees, you have two choices:
1. Stay in your home as long as possible to play the pretend and extend game.  Where the bank proceeds to foreclosure, hire an attorney so you can pretend and extend the game a little longer.

2. Hire a local real estate agent to help you get off the pretend and extend game and into reality.  Let's face it, your home isn't going to go up in value like it did several years ago.  Why throw good money at bad and find yourself in a short sale situation years from now with a home that's still worth less that what you bought it for.  Stop extending the problem and solve it today.  Better now than later.

Thanks for reading.  If you or someone you know is tired of the pretend and extend game, give me a call so we can work on solving your problem today.

Richard Johnston
Exclusive Estate Properties

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