About those home loan modifications

[Potemkin]

"Oh, please! Let us redo our loan! Those evil banks and mortgage companies tricked us into signing those home loans! Give us a do over!"

Banks/Government: "OK, you get the do over"

Later: "Uh, we still can't pay and are going to default."

51.5% are delinquent again after 9 months.

Look, if you couldn't afford it then, you are most likely not going to afford it now no matter what concessions are made.

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Half of U.S. Home Loan Modifications Default Again
http://www.bloomberg.com/apps/news?pid=20601087&sid=aVYxPZ56vjys

[jason]

that's why we need loan forgiveness. in fact, how about we pay them to stay in their current homes.

[Ross]

Extract from an article quoting Peter Schiff

If the Administration had allowed losses to fall where they rightfully belong, namely on those who foolishly loaded up on toxic mortgage bonds, then the housing market would have already found its true clearing level. Instead, every measure is working to prolong and delay the ultimate reckoning, while setting up taxpayers as the patsy. Given the horrendous government deficit projections for the next several years, any losses incurred by the government mortgage portfolio may add a critical stress on America's fiscal viability.

In addition, the moves add even more incentives detrimental to economic growth. By targeting benefits toward unemployed homeowners, or those who are delinquent in mortgage payments, the program will encourage some mortgage holders to defer job-hunting and miss payments. Also, in offering loan-balance reductions, the program makes no distinction between homeowners who naively overpaid during the speculative peak and those who willfully put themselves underwater by taking advantage of home equity loans on existing mortgages. In short, these policies reward profligacy and penalize prudence.

The longer the government continues to distort the underlying economics of the real estate market, the longer it will take for the sector to heal itself - and the longer the sickness will infect the broader economy.

Full article can be found at ...
http://www.investmentnews.com/article/20100326/FREE/100329901