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Posts Tagged ‘principal reduction of mortgages’

Barack Really is Going to Pay Her Mortgage

Posted by Larry Doyle on March 26th, 2010 8:24 AM |

My blood is boiling. Why?

The assault on the principles of free market capitalism is escalating with news that banks are poised to start reducing principal balances on certain mortgages.

I empathize with those who are strapped, but I have never felt more strongly on a topic than this principal reduction. Despite any and all bulls*%# put forth by those in Washington, the principal reduction program is an enormous escalation of the violation of moral hazard which our country sadly continues to embrace. I have no doubt it will expedite the development of a socialized housing finance system.

Do not think for a second that banks will take the hit on these principal reductions. Who will take the hit? Me and you. Those who have worked hard, saved, played by the rules, and taught our children to do the same. (more…)

What Is a Mortgage Cram Down?

Posted by Larry Doyle on January 1st, 2009 11:35 AM |

On December 23rd in my piece, “Everything’s Negotiable…“, I wrote that I thought for those financially challenged and potentially facing personal bankruptcy with resulting mortgage default and foreclosure that principal reduction was definitely on the horizon. I wrote in that piece:

Additionally, the likely first piece of government assistance to come from the Obama administration is capital to help homeowners in foreclosure or approaching foreclosure. I expect that that assistance will incorporate some degree of mortgage principal reduction.

I would definitely broach with your banker the topic of principal reduction after laying out your budget. The worst that the bank can do is say no. If that is their response you will have been on record as having been proactive in the process and that can’t hurt you if in fact you end up actually defaulting.

Given the anemic response to the current loan modification programs along with the high level of re-defaulting, it is readily apparent that the powers that be should have been listening to Sheila Bair’s proposal on principal reduction from the outset. Sheila promoted the concept of government funding sharing in the losses with the banks in the principal reduction process.

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