One question I am sometimes asked is, “What if I lose my job because
of Y2K and can’t make my mortgage payments?”
If Y2K-related failures are widespread, there will be many people in
the same boat. I do not think banks will act to re-possess homes — at
least not for a good, long while. Here’s why:
- They won’t be able to do anything with it once they get
it. If we’re in the middle of an economic recession — or worse — who
are they going to sell your home to? There will not be many buyers
relative to the number of homes for sale. - The home will hold its value better if it’s occupied. Vacant
homes decline in value much more quickly than occupied ones. The bank
will want to protect its investment. Keeping you in the home is a better
alternative to kicking you out. - The government may protect you. In the event of a national
housing crisis, Congress will most likely step forward to prevent
creditors from foreclosing if the borrower’s ability to pay is inhibited
by Y2k-related failures outside of his control.
At worst, even if you can’t make your payments, you will
likely have housing for a good long while. If you are particularly
worried about this, you might want to save up enough cash to make a
couple of extra house payments.
