Banks and mortgage lenders should slash the balance on mortgages owed by all homeowners in light of the housing crisis blamed heavily on U.S. bankers, according to a new Housing Predictor opinion poll.
The just released survey found that 69% of respondents to the online poll said lenders should reduce mortgage principal for all home loan borrowers.
A large group of economists who specialize in real estate say that the only way the U.S. housing market will recover from the real estate bust is to put all mortgage borrowers on a level playing field. The reduction in mortgage principal would also reduce the number of homeowners who are likely to walk away from their underwater mortgages in the next few years.
Only 31% or less than one out of three respondents said that banks should not offer to cut mortgage principal. In most cases, the reduction would have to be approved by investors who have previously lobbied against changes to mortgage contracts. However, investors and lenders’ have been changing their tune in recent weeks agreeing to a larger share of short sales in efforts to reduce the record breaking foreclosure crisis.
As part of its $25 billion settlement with 49 state attorneys general, the nation’s five largest banks vowed to work more closely with homeowners at risk of foreclosure and offer alternatives to foreclosure, including short sales.
The banking industry has been besieged by protests and lawsuits over rising foreclosures produced as a result of poor underwriting guidelines during the real estate boom.
Answer the New Predictor Poll
Should lenders cut mortgage principal for all mortgage borrowers to help the housing crisis?
Yes 69% No 31%
To see the previous poll results click here.