Recently, I was asked by a friend of mine who had just been laid off why he should keep making his mortgage payment. As a responsible individual, he is greatly concerned about his credit, thus, despite his increased financial difficulties, he continues to make his payments. He is upset that government, media, and lenders are focusing on those individuals who are at risk of foreclosure. Essentially, those individuals who choose to not make payments are being rewarded with various opportunities to stay in their homes. His question is this, why aren’t we trying to help those homeowners who are just barely getting by… especially those who have maintained their sense of responsibility by honoring the debt they promised to repay?
Looking back on the conversation, I do begin to wonder if the bailouts are making thing worse by giving homeowners who are struggling less incentive to keep make their payments. You hear each and every day about programs designed to assist owners in re-negotiating their rates and even asking for re-evaluations of value. At some point, every struggling homeowner is going to quit making payments and ask for the same assistance that is being given to those who have not honored their promise to repay.