A new initiative called Project Lifeline has been announced as another attempt to help homeowners (and lenders) tackle the current mortgage mess. For qualified homeowners, the program may forestall the foreclosure process for 30 days while lenders try to work with mortgagees to renegotiate terms that will keep the homeowner in the house - and thus the loan - presumably benefitting both parties.
Project Lifeline is supposed to be available to people who have taken out all types of mortgages, not just the folks who have high-cost subprime loans. Put together by six of the largest lenders in the nation, the program means that mortgage holders who are 90+ days overdue on their loan payments should be contacted by their lenders to work things out, or at least put off foreclosure while you weigh your options.
I'm sure that individuals who were not victims of the subprime loan situation are rejoicing at this point, as it opens up more options, but in general, one must question exactly how well this Band-Aid will work. Hopefully by keeping people in their homes, the banks will be able to keep something coming in payment-wise, which is, of course, much better than nothing! Foreclosure is normally a looming threat for a certain portion of the population - now it is almost mainstream.
The question before us now is will we, as a society, learn from this situation? Or will mass foreclosures and bankruptcies simply become something that "has happened to everyone"? Perhaps something that was once shameful will now be not only acceptable, but almost flaunted (teen starlet pregnancies, anyone?) by a nation of folks who blame others for their own mistakes, or their part in bigger problems.
I have every bit of sympathy for people who work hard, made intelligent choices in home loans, and who are, through no fault of their own (layoffs, for instance) facing foreclosure. But for those who signed on the dotted line for homes that they knew, in their heart of hearts, they couldn't really afford - we have to stop and give them a second look - as well as the predatory lenders who GAVE them the credit in the first place, instead of simply saying no, or offering a much smaller sum of money.
It wasn't so long ago, people, that $100,000 bought you a heckuva lot of house - and 1,776 square feet with 3 bedrooms, 3 baths, living/dining and a family room wasn't a "cottage" or "small home" - it was something you worked your way UP TO. For those in the banking and real estate fields, this is more than a blip on the radar -this affects their businesses and livelihoods too. So many ripples in the pond!
The question before us all is: what steps can business people take to try to insure against such slumps, or "rainy days", no matter what their industry?
Have a backup plan! I don't think anyone should rely on one source of income; business owner or not. You have to have something else besides your main frame or else you could find yourself in big trouble. Invest, open a high interest savings account, start a side business, add an angle to your current business, there are so many ways to create a backup plan and I hope that more people will start to do so.
Posted by: DJ Nelson | February 12, 2008 12:25 PM | Permalink to Comment