Should your neighbors get a chunk of their mortgage permanently written off because their income has fallen, they can't afford their payments and their home's value has fallen?
Meanwhile, your house has also lost value. But you've been fortunate enough to keep your job. Or bought at a lower price. Or have a lot in savings. Or, for whatever reason, you can afford your payments. So you don't get a deal. You might get irked, start demanding a cut. Maybe you would fall behind on purpose, trying to get a reduction. (By the way, that probably won't work, and it will mess up your credit.)
Those are among the concerns as writing off mortgage principal gains traction as a tool to prevent foreclosures.
Critics of mortgage modifications in general say people who can't afford their homes should give them up and move. Normally, that's what happens, but we haven't seen normal in a long time.
Foreclosures are a noose around the housing market's neck, and that won't change for a long time.
President Obama's well-intended efforts to help distressed homeowners have fallen short. Some problems, like program complexity and inept service from lenders, were probably avoidable.
But entrenched unemployment makes it hard to keep people in their homes, and deflated values make people less interested in hanging on. That's why we've seen several programs trying to help the jobless. And that's why principal reduction is gaining interest.
So what do you think: Is writing off mortgage principal a good idea for foreclosure prevention? Click here to vote.
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