In an effort to reduce the number of foreclosures this year and next year by an estimated 600,000+ households, there are two bills before Congress that would grand “judges the authority to reduce mortgage debt.”
The two bills only apply to borrowers that live in their homes and have either subprime mortgages or other non-traditional mortgages, such as interest-only loans.
“It is one of many efforts by government and consumer groups to encourage lenders and mortgage servicers to restructure loans to more affordable terms for home owners in danger of default.”
Lenders, of course, are in an uproar with this claiming that this would increase mortgage costs for everyone because of the “bad bets” of a few. Proponents say these types of risky loans should have not been available in the first place.
What an interesting relationship. The borrowers don’t want to take responsibility for something they knowingly signed up for and claim that someone else shouldn’t have let them do it, and the lenders don’t want to take responsibility saying the consumer should not have bought that expensive house and need to suffer the repercussions or they will keep making bad decisions. Interesting indeed.
What do you think? Does the responsibility lie with the borrower to not take out a risky loan? Or does the responsibility lie with the lender to not offer the risky loan in the first place.