Resolving Foreclosure Epidemic, One Loan at a Time

I am generally cynical about government efforts to correct problems in the real estate industry. A while back, Massachusetts officials considered creating a disclosure about non-fixed mortgages; my reaction was “big deal.” Now, Kim Blanton reports that a fund is being established to financially help those harmed by the recent wave of sub-prime lending. See article. The State promises to “play hard ball” to get lenders to carry some of the costs. And, lo and behold! Martha Coakley has already gotten a response from one of the big lenders. See article.

On the face of it, this seems like the perfect balance; it places the financial onus on both the borrowers who failed to protect themselves and the lenders who offered magic solutions instead of real financial help.

Still, the example in the July 12th article is a borrowers who had a $32,000 annual income who signed on for a $529,000 mortgage. I wonder how that borrower failed to ask “how much are the payments?” before getting to the closing table. Does that lender have salesmanship skills far beyond anything I can do? Or was there an out-and-out lie about how much this would cost when the question was asked earlier on in the loan process? The devil will be in the details here. I wish our Attorney General and her staff good luck in the huge task she has taken on.