A major reason financial institutions and investors are so determined to avoid modifying loan terms more aggressively has to do with accounting nuances, say industry lobbyists. If, for example, a bank lowered the balance of a certain mortgage, there would be a strong argument that it would have to reduce the value on its balance sheet of all similar mortgages in the same geographic area to reflect the danger that the region had hit an economic slump. Under this stringent approach, financial industry mortgage-related losses could far surpass even the grim $1.1 trillion
Lets be real, there is no stop for failing houses prices. This is what a bubble does. Not to mention that fact giving the judge the ability to modify a contract after it was sign would be a major legal problem. We need housing to go to the right price, which is another 20% down at least. We need the banks to be fixed and people need to be held accountable for the bad loans. Everything else is putting off judgement day.
No comments:
Post a Comment