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Principal Reduction and Reduced Interest Rates for homeowners?

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A hardy group of MoveOn.org and Occupy Marin protesters met at the San Rafael City Hall Thursday to express their displeasure with the banking industry and the government’s lukewarm efforts to help distressed home owners.

home foreclosures, Occupy Marin

Protesters gather on a raining morning at the San Rafael City Hall to voice their displeasure with the banking industry.

There are something like 11 million families who owe more on their homes than they are worth, and nationwide protests are demanding more aggressive government action to provide relief.

Occupy Marin, Home Foreclosures, MoveOn.org

Currently, the federal government wants banks to make it easier for homeowners to refinance with lower interest rates than were in effect when they bought their homes. This would lower monthly payments, but wouldn’t be enough to satisfy Occupy and MoveOn. They believe that greedy banks caused the current housing crisis, and shouldn’t be let off the hook so easily.

Occupy Marin protest home foreclosures

Principal Reduction and reduced interest rates for homeowners?

As I understand it, protesters are demanding that mortgage rates should not only be reduced to today’s historic lows, but also the amount owned on a house should be no higher than today’s fair market value. If you owe $200,000 and pay 6% on your house that would sell today for $150,000 at 4% interest, this is the new arrangement the bank should make with you. If I have this wrong, someone please correct me.

I have no idea if this is possible or a fair solution. Critics will argue that for every deserving family struggling for a piece of the American dream, there is a conniving speculator or deadbeat, trying to get a free ride. How do you sort this mess out?

Under water housing crisis, Prosecute Bankers, end foreclosures

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Written by Ron Greene

March 16, 2012 at 10:42 am

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