What specific measures will help the mortgaged?
According to the New York Times, three measures will be carried out:
- 1 million people who are paying a mortgage on a higher appraised value than the current one ( mortgages ‘underwater’ ) will see their debt reduced …
- … Or they will start paying a lower interest for the loan
- Some 750,000 people who lost their homes between 2008 and 2011 will receive checks worth 2,000 dollars
The formula to know what help will go to each person will be complicated but it is that the compensation is greater the greater the difference between the initial appraisal value of your mortgage and the current one .
1 of every 5 mortgaged Americans currently has an ‘underwater’ mortgage. Among all, they owe the banks 700,000 million more than what their houses cost. The average is $ 50,000 per head. However, the average aid received by each affected person is $ 20,000.
Because right now?
In 2010, following an investigation into mortgage services, attorneys general of the 50 states revealed that American banks were carrying out evictions using false or incomplete documentation. As a result of that, the investigation was opened beyond abuses in foreclosures and it also became concerned about how to help mortgaged people with problems and achieve a reactivation of the housing market. And these 3 measures arrived as a result.
Bank of America, JP Morgan Chase, Wells Fargo, Citigroup and Ally Financial, the 5 banks of the agreement , are happy to announce the measures as this will erase their problems with justice , although regulators will still have the right to investigate other elements that contributed to the housing bubble.
The final details of the agreement have yet to be negotiated and it is not yet known for sure how many states will participate. But California and New York , until now undecided, seem to have already given the “yes”. Only in the state of New York, it is estimated that more than 46,000 people will receive some type of benefit.
An example for Spain
It is true that this is not a solution to all housing problems in the US, nor does it fully compensate for the injustices committed by banks with their clients, but it is a real amendment that will improve the situation of millions of people In U.S.A.
We can not stop thinking about people who are in the same situation in Spain:
- In people who have had access to a credit that the banks knew they would not be able to return
- In people who have already lost their home and continue to have a life-long debt with the bank, due to the misplacement of the appraisal value between now and now, and also due to a law that allows banks to keep the home for the 60% of its value
Taking into account that:
- In the USA, dation in payment is applied normally and in Spain it is not
- The US banks that received aid from the Government returned them and those from Spain have neither returned nor intend to do so
- The real estate bubble and ‘underwater’ mortgages exist in equal measure in the two countries
From HelpMyCash we consider that:
- It is useful for the Government to help the banks to protect the savings of the citizens and the Spanish financial system, but not that it does not demand any counterpart.
- It would be desirable for banks to be obliged to convert part of these subsidies, taken from the public purse, into credit for their clients.
- A good starting point would be to force the banks to restructure the loans of the mortgaged with payment problems. And not as now (with many costs and high interest) but, for example, extending the term of the mortgage or offering a lack of capital without raising the interest or charging commissions
- In the long run, banks should have to return to the Government at least part of the aid they are receiving
Otherwise, the absence of measures will turn the banks into bottomless bags that are not very useful for the citizen (which has already begun to manifest itself against the entities) and will delay the increasingly urgent reestablishment of the housing market in Spain.