Consumer Law

Senseless Foreclosure Story: Bernanke Home

By Alan White

The Wall Street Journal reports today on the foreclosure sale of Chairman Bernanke's childhood home in South Carolina.  The couple that lost the home, a National Guard soldier and a Wal-Mart store assistant manager, bought it with a subprime mortgage at 10.1% from Option One, the now-defunct H&R Block subprime affiliate.  The $123,000 mortgage required monthly payments of $1,088.  After several job setbacks the couple fell behind and the servicer foreclosed, recently selling the home for $83,000.  If instead of foreclosing, the servicer had offered the couple a modified mortgage at say $90,000 at 5.5% interest, their payment would have been around $510, i.e. half of the prior payment.  The story doesn't provide all the details but this sounds like a loan that could have been saved, for the mutual benefit of the homeowners and the investors, who ended up with a loss of $40,000 plus interest and expenses.

Full post as published by CL&P Blog on February 14, 2009 (boomark / email).