At various times since the start of the mortgage crisis, proposals were made that the number of redemption will diminish if the mortgage companies will reduce the essential balances of some loans. In states like California and Florida house values have dropped significantly. On some, the value decreased from 40 to 50%. These homeowners have a lot more on their loans than their house is worth.

People in this position, which are facing redemption, have very little incentive to save their homes. They need much more than their home is worth. They can never restore what they ultimately pay for the credits. And they left to go buy. They move on and start all over again.

If the principal balance was reduced to about that house is worth, many of the owners will be asked to do everything possible to save your home from foreclosure. In most cases, mortgage companies would recover the amount of reduction from the interest paid on the loan.

Mortgage companies are very rarely reduce the principal balances of loans. It seems that they are still rooted in the old belief that most people will still try to keep their homes, because they want to avoid, as they will look at foreclosure on their record.

On several occasions since 2007, Congress looked at the adoption of legislation giving judges in bankruptcy cases the authorities to reduce the basic balances of the loan. Whenever it was suggested that mortgage companies opposed. Their lobbyists have been successful in getting the proposal defeated.

More and more people in this position for walking. They believe that the stigma of redemption will be short term. Financial and they are better. They often end up renting for far less money than their loan repayment. After a few years they will be able to buy a home.

The main loss is an investor who put up money for the house. They recover much less than their investment. House sells for much less than what they invested. In addition, they receive far less than they would have if the landlord was in the house.

How long will it take for mortgage companies to change their thinking? How long will it be before they begin to look at where the balance of the loan much more than house is worth? When they agree that the balance of the loan must be reduced to the value of the house?

Time for mortgage companies to start reducing the basic balance of the loan, it goes. Most likely, the public outcry would require Congress to pass a law allowing it in certain specific cases.

When this happens, the mortgage company will look bad. They could have been avoided by reducing the balances on these loans on own, and they decided not to do so.

Meanwhile, more families unnecessarily abandon their efforts to save their homes from foreclosure and move on. In addition, investors will lose much more money than they should have.

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