Monday, December 8, 2008

Mortgage modifications not working.

More than half of the mortgages modified in the first half of the year to make payments more affordable are defaulting again. This isn't good news. OTOH, those mortgages were voluntary modifications and weren't the kind of major modifications being comtemplated by everybody but the Republicans. It does, however, fit what I thought: there's a lot of people out there who simply can't afford their mortgage on any terms, either we completely rewrite their mortgages (including massive (on the order of 50%) reductions in the principal owed, which the banks won't do voluntarily because of how that's going to affect them) or we let them default and get them out of the system completely. Small steps, minor patches, will just prolong the mess.

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