NYT: On the Road to Mortgage Relief

[flpoljunkie]

Real recovery, in the housing market and in the economy, will require reducing the principal balance on many underwater loans. That would help to stanch defaults and foreclosures by restoring equity to borrowers as well as lowering their payments.

Fewer foreclosures would help to halt the decline in home values, replenishing battered property tax coffers. Restoring home equity is also crucial to getting consumers to spend again. But banks have balked at reducing principal because they don’t want to face up to the losses.

For too long, President Obama has relied on the banks to do what’s right. That hasn’t worked. Strong political pressure and likely legislation may be the only way to get the banks to accept write downs of principal.

Mr. Obama needs to start pushing now. He needs to explain that until many more Americans get out from under excessive debt, the rest of the economy won’t recover.

http://www.nytimes.com/2011/10/25/opinion/on-the-road-to-mortgage-relief.html?_r=1&hp

[Demeter]

1. Captain Obvious Writes NYT Editorial

Still, it's better than Fox.

[trumad]

2. It allows banks to skate on their bad loans.

Doesn't do anything for excess principal--- Foreclosures will continue at neck break speed.

[flpoljunkie]

3. The NYT points out the need for banks to face their losses by writing down principal

What President Obama announced yesterday was good, but by any means, not sufficient.

[trumad]

4. Check it out.

http://news.firedoglake.com/2011/10/24/fhfa-refi-plan-helps-banks-reduce-liability-on-bad-loan-origination/

[flpoljunkie]

5. Yes, that's correct. A big carrot for the banks.