That's it, everyone. If you didn't buy more than you could afford, or if you didn't buy at all, we'll just hit your forehead with this big "SUCKER" stamp and hand a few bags of money to the guy down the street who's intentionally falling behind on his payments. Let this be a lesson for you.

Off-Topic:

A middle school in North Carolina is selling better test scores to students in a bid to raise money.

The Raleigh News & Observer newspaper reported Wednesday that a parent advisory council at Rosewood Middle School came up with the fundraising plan after last year's chocolate sale flopped.

The school will sell 20 test points to students for $20. Students can add 10 extra points to each of two tests of their choice. The extra points could take a student from a B to an A on those tests or from a failing grade to a passing one.

Assume Crash Positions wrote:

You mean skills other than how to operate the espresso machine at Starbucks or clean the grill at McD's, right?

I was thinking more along the lines of milking goats, raising chickens, and catching s
Comment by Cinco-X from thread 'Economic Outlook: Possible Upside Surprises, Downside Risks'

ghostfaceinvestah wrote:

so this isn't a principal reduction, but a principal forbearance. not a great deal.

Story says the principle is reduced to $334,400 from an initial first note balance of $392,000. That's a reduction, no? The balloon payment is simply the leftover principle after 25 years paying at a 40-year amortization rate.

The only 'economic' strategy that's going to work in slowing foreclosures and keeping people in their underwater bubble homes... is dramatic 'principal reductions' and/or no-doc & low-doc modifications and refinancings...

Thanks CR, this reminds me to make an offer to B of A to not pay annual credit card fees to them anymore.

"That's a reduction, no? The balloon payment is simply the leftover principle after 25 years paying at a 40-year amortization rate."

Nope, 334,377.69 amortized over 40 years at 5.5% gives you a payment of 1,724.62. So they are fully amortizing the 334,377.69 over 40 years, then still requiring the balloon of 197,714.69 after 40 years.

334,377.69+197,714.69 = 532,092.38. So they are charging interest on the forbearance amount as well.

NOT a good deal.

If I get my handy dandy calculator, I'm guessing even with the principle reduction, the property doesn't come above water for 5 years.

"The school will sell 20 test points to students for $20. Students can add 10 extra points to each of two tests of their choice. The extra points could take a student from a B to an A on those tests or from a failing grade to a passing one."

How much to get an underachieving, political hopeful, through Yale?

Is there any gold in Ft. Knox/West Point/NY Fed (that has US ownership)?
Comment by JimPortlandOR from thread 'Economic Outlook: Possible Upside Surprises, Downside Risks'

None in any substantial quantity at West Point that I know of, or have ever heard of. Are you thinking of the movie "National Treasure"

Blackhalo wrote:

How much to get an underachieving, political hopeful, through Yale?

Go to the source and ask John Kerry-

What if this news makes it to yahoo boards and all manner of other sites. Assume that it's read by 10M people and 10% of them pursue the ruthless default avenue.

If the average mortgage is $200K and 1 M pursue default, then that's one hell of a lot of zeroes ($200B if I'm correct?). Apparently someone realized that this wasn't a really good idea...

That would put a dent in things.

CalculatedRisk wrote:

Rob, I tried calling the phone number. The number is answered by a recording that announces they are a "debt collector", and then says they are now closed. ROFLOL.

CR,
In all seriousness I am increasingly troubled by these trial balloons and early launches and all the rest. People can sense desperation.

Increasingly they also have to address the issue of the better you are as a client the worse you are treated. This hs long term negative consequences.

Report: 10 states face looming budget disasters - Yahoo! News

" Blackhalo wrote:

How much to get an underachieving, political hopeful, through Yale?

Go to the source and ask John Kerry- "

How does that compare to the cost of getting a political failure through both Yale and Harvard?

read the current post.
gave me the idea to set up a lottery consultation. basic program would be to convert any losses into a negative carry loan amortized over 40 years, while booking all wins immediately. it's a strategy to create the largest bank in the country in no time

Here is my counter offer to BofA:

Homeowner will pay nothing, with no refinancing at any rate over any term, and with no balloon payment of any kind ever made, under any circumstances.
BofA will, for its part, "suck it."

All things considered, that's a pretty good counter, and I strongly advise BofA to take it.

here's the WSJ story on it.

Fixing Troubled Mortgages for the Elderly - WSJ.com
Mr. Garcia owed about $490,000 on his home, which a recent appraisal said is now worth only about $150,000. Bank of America wrote down about $405,000 of the loan. To account for the rest, the bank then issued a reverse mortgage for about $85,000. But instead of paying that amount to Mr. Garcia, as is usual with a reverse mortgage, the bank paid the proceeds to itself. A reverse mortgage is a form of equity loan available to older homeowners that generally doesn't need to be repaid until after the homeowner dies.

Dictionary, Encyclopedia and Thesaurus - The Free Dictionary

*>**** prin·ci·ple (prns-pl)**

n.
1. A basic truth, law, or assumption: the principles of democracy.
2.
a. A rule or standard, especially of good behavior: a man of principle.
b. The collectivity of moral or ethical standards or judgments: a decision based on principle rather than expediency.
3. A fixed or predetermined policy or mode of action.
4. A basic or essential quality or element determining intrinsic nature or characteristic behavior: the principle of self-preservation.
5. A rule or law concerning the functioning of natural phenomena or mechanical processes: the principle of jet propulsion.*

**** prin·ci·pal (prns-pl)**
adj.
1. First, highest, or foremost in importance, rank, worth, or degree; chief. See Synonyms at chief.
2. Of, relating to, or being financial principal, or a principal in a financial transaction.
n.
1. One who holds a position of presiding rank, especially the head of an elementary school or high school.
2. A main participant in a situation.
3. A person having a leading or starring role.
4.
a. The capital or main body of an estate or financial holding as distinguished from the interest or revenue from it.
b. A sum of money owed as a debt, upon which interest is calculated. ****

mp:

us=associates.

I wonder about the various members of the commentariat, having read y'all for years now. The knowledge base here is fascinating.

But you're the only one who i suspect has to enter the mp workarea through an elevator accessed via a Starbucks refrigerator.

China Signals It May Allow Currency to Rise Against Dollar - CNBC

JimPortlandOR wrote:

I'd heard somewhere they were also storing it, but haven't googled to see where i could have heard that.

Spent 2 years there as a Cadet. Never saw anything that could've been construed as something like that, and as cadets, we did travel over much of the post. Do you frequent the DailyKOS? I've seen a few whoppers that originated there, such as the rumor that John McCain crashed 7 airplanes (it's not true) before being shot down.

Are these loan modifications recourse?

US Mint at West Point:

Mint Facilities - The United States Mint

poic wrote:

China Signals It May Allow Currency to Rise Against Dollar - China * Asia * News * Story - CNBC.com

They're a fool if they do this more than a few percent. I'd just hold tight, if I were they.

Working out a 'deal' on the primary loan...there are cases where the 2nd ( a different lender than the 1st) initiates foreclosure...which will mess up a modification agreement (or shortsale) in the works where the borrower is delinquent on the 1st & 2nd (& 3rd, etc.).

The deals remind me of the Seinfeld skit 'moviephone'

kramer..." why don't you just tell me how much you can pay"

re: China
APEC, yes it is still alive even the goal of a free trade zone is dead, had some finance ministers from other Asian countries complain about China's currency valuation. Also, the EU which has borne the brunt of the currency gaming has complained loudly and led a wave of tariffs. US tariffs have played a role too. Feels like a delay tactic. They have a long way to go before they are even back at the pre-crisis yuan:dollar levels, which were way off natural levels

"They're a fool if they do this more than a few percent. I'd just hold tight, if I were they. "

I have a feeling that the Chinese Central Bank knows a bit more than others what's truly going on with inflation, unemployment, exports, imports etc.. in China. Versus what you hear in the news.

this particular loan is already recourse because it was refied in 2006.

A good 'offer' for a modification is a 40 year loan, 35% principal reduction or so depending of the bubble area, a 2-3% fixed interest rate, and one-page, no-doc application just needing a signature...this mod program might keep some 'homeowners' in their homes...

What an insane system we've got.

It really hit me a year ago that real estate is like a ratcheting treadmill. . . whenever disposable income increases -- no matter how: from productivity, labor arbitrage, lower income taxes, lower interest rates -- we bid up the cost of housing to match, leaving us working stiffs no richer.

Then every 7 years or so it all crashes and we have to restart the treadmill.

What a crazy system. Name a decade of US history and chances are I can find a serious speculative crash coming out of real estate. Until I discovered the georgist land value tax I had no idea there could be an alternative.

if I were in the position of this post's case-scenario, I would rewrite the offered contract and return it to them signed. If BofA agrees to the unilateral renegotiation, bonus, if not then you're still ahead of the first offer. Wouldn't be surprised if they were being cheap and using underpaid drones as official agents of the bank. If they do spot the changes, then use it as an opening for further negotiations where delay is a strategic target

"If I were this borrower, I would negotiate a lower interest rate to get a lower monthly payment......"
.
....If I were THIS borrower, I'd pack up my bags and walk the Hell away - those terms are Nuts!

If buyers/taxpayers were 'insolvent' when they defaulted and were foreclosed upon, they may not be liable for any lender 'loss' tax ramifications?
taxes may be another issue for default borrowers in addition to 'recourse'...which will go nowhere if buyers are 'insolvent'...

Comrade Troyski wrote:

What an insane system we've got.
It really hit me a year ago that real estate is like a ratcheting treadmill. . . whenever disposable income increases -- no matter how: from productivity, labor arbitrage, lower income taxes, lower interest rates -- we bid up the cost of housing to match, leaving us working stiffs no richer.

Well, I used to live in the Soviet Union. That system of land ownership sucked more.

As of March of this year the United States government officially held 8,133.5 tonnes of gold, of which half is stored at fort Knox. This is down drastically from the peak that occurred just after WWII when the U.S. had over 20,000 tonnes of gold.

All about delaying the Notice of disclosure. That is what it will always be about from here on out.

Ciao
MS

Re 3.5% GDP growth:

Big contributors were consumer spending on autos — cash for clunkers — federal government, inventories and housing — tax credit…

Economists React: GDP Puts Last Bit of Dirt on Great Recession’s Grave? - Real Time Economics - WSJ

In other words, take away the stimpack, and authentic growth is way lower. Apologies for my confusion earlier, I'm trying to do too many things at once.

Private wages year over year
energyecon: Personal Income: Private Wages Year Over Year Change

Which is worse - bankers or terrorists wrote:

Relevant because he says companies don't do research anymore as they are too focused on quarterly results. As a former university professor, I say all of the research has to be at the company level, since universities can't do it anymore.

I know! Let's have the DoE National Labs do it! (crickets chirp, waits for Nuke to add hysterical bitter comment here)

What this leads to is an economy based upon financialization rather than innovation, since no one is innovating any more. That means endless asset bubbles.

See, I think the financialization is actually the dog here, rather than the tail. If it were hard to make decent returns through any means other than innovation, then innovation would happen. But we've made it very easy for anyone to profit/gamble/extort their way to profits and then flee the scene.

I don't understand how we continue to talk about moral hazard or bad motivations in the abstract. It's like a permanent belief in the selfishness of humanity, then saying that America is somehow totally exempt from it. It bloweth the mindeth.

When I first saw 4.5% 30 year loans, I thought who would want to hold those to maturity?

Apparently nobody...

I see it as financialization was the only vehicle to avoid politically unpalatable recessions many moons ago, and that it attracted attention away from R&D. Eventually the gap between what financialization apparently offered and what R&D could deliver grew and grew, while priorities shifted proportionally. I say apparently offered, because I believe a lot of the financialization analyzed over its life cycle will have much lower returns than expected with the bulk of the difference being ponzi, fraud and obfuscation.

Which is worse - bankers or terrorists wrote:

Well, I used to live in the Soviet Union. That system of land ownership sucked more.

No doubt. That sort of thinking was what confusing me in my early-mid adulthood -- I could see no policy space between a command economy and total, absolute rights in private land ownership. Then in late 2002 I discovered the georgist argument that Land is different, and the scales fell off

edit:

oh yeah:

Open letter to Mikhail Gorbachev (1990) - Wikisource

Winston,
20,000 tons of gold held at Ft. Knox went down to 8000 tons or so...where'd the gold go?

The Moral Hazard is getting Bigger and Bigger every day now...

And somebody continues to manipulate the REITs. Step out from behind the curtain, Ben. Take a bow!

1 currency now -yogi wrote:

Boy, the rotating tiles are really annoying.

Yeah, I agree it's updating too frequently. I'll slow it down.

I just know a lot of Iranians in Canada who are superb and world renowned in EE. - EHP

Yes, it's the diaspora. They are the cream of the crop, by all accounts. The guys my dad was teaching were connected to the Shah's military. My dad's remarks lead me to think they represent the privileged "second sons" rather than prime sons from prime wives. If that's the expression I want.

kcoop
if your suggestion box is open, could you turn off the automatic comment preview for the mobile theme? it runs slowly, at least for me

EvilHenryPaulson wrote:

could you turn off the automatic comment preview for the mobile theme

Have you tried disabling it? I haven't looked recently, but I included a cookie that should remember your setting. I agree it should be the default for the mobile theme though.

Scone- how is that different from GDP growth based on consumer borrowing? - c

Well, if (just an example) the stimpack contributed 1.5% of the 3.5%, then "real" growth was 2%. In other words, what would growth have been if the stimpack was not there? I don't have an answer to that, but everybody seems to think it's significant.

BTW, one of the economists quoted in the article points to defense spending as well as consumer stuff. I don't have a breakdown of categories, that would be useful.

merchants of fear wrote:

The only 'economic' strategy that's going to work in slowing foreclosures and keeping people in their underwater bubble homes... is dramatic 'principal reductions' and/or no-doc & low-doc modifications and refinancings...

That won't work, and principal reductions are the worst idea EVER. If you really want to keep people from foreclosing (which frankly I don't care one way or another), you urge lawmakers to make all loans full recourse immediately. Go a step further and make them like child support or student loans, something that nobody can get away from even with bankruptcy. You'll see these intentional walk-aways stop in a heartbeat. Principal reductions will fuel the fire and be like delivering a winning lotto ticket to every asshole that bought during the bubble or sucked the equity out of their houses.

The diaspora of wealthy and brainy Persians seemed to favor the City of Angles...

It usually takes foreigners a generation to fit into a new existence elsewhere, but they seemed to have found their groove sooner than most.

I kinda wonder what becomes of them, should we go to war with Iran?

A middle school in North Carolina is selling better test scores to students in a bid to raise money.

Apparently NC DPI just put a stop to this.

But... the ongoing practise by several schools of adding to grades in exchange for donating school supplies is apparently allowed to continue, one infers.

That should teach them kids some interesting lessons.

Imagine the position of an anti-consumer, anti-American, anti-worker advocate...it would be almost fashionable in some internet circles...as condemnation of the U.S. intensifies for the 'expectations' created for the 'currency speculator' attacks and 'predictions' of the international goldbugs...

EHP,
Good point. It will be interesting to see if FHA buyers can be steered to places like the South Waterfront in PDX South Waterfront Homes for Sale - Portland Oregon Lofts Condos Condominiums Townhouses and Homes for Sale which has 640 sq ft units for $170K.

...it's terrible that they have to exist - EHP

I'm not so sure about that. It shakes up the gene pool, which is a good thing, and evens out the economies of the world, where people send money home from the 1st world to the 3rd. It also stimulates trade and travel. It certainly saves lives, e.g. Jews escaping from Europe in WWII.

And it's been going on for many thousands of years. Humans have always been nomadic, to some extent, and some still are. Historians don't see it as a bad thing, per se.

klarek,
People would still walk if they had to even it was 'illegal'...buyers didn't just buy any product...they bought products based on a deregulated Bubble/Bust pyramid, House of Cards...

threetorches wrote:

@ klarek:

BWAHAHAHAHAHAHAH!

Ain't no money, honey, no matter what the law says.
Ain't no money.

Freedom's just another word for nothing left to lose ...

I'm afraid I don't know what you're saying. So you think these principal reductions are a good thing?

Principal reductions would be fair in many cases since the values (we know now) were artificially pumped up by turning the RE/CRE markets into Casinos with dangerous historic leverage built on a House of Cards, regulatory capture, deregulation, faulty ratings, hit-the mark appraisals, no-doc & low doc risky lending, etc.

scone
I didn't say it is terrible they exist, but that is is terrible they have to exist. That there is genocide, famine, war, political conquest and other things that are the driving force. We can easily achieve the same results without such concentrations of misery. Even if we humans didn't have a soft spot for adventurism like taking a one-way trip to Mars, and we couldn't achieve the same churning and cross-pollination I wouldn't be opposed to losing mobs of jerk-faces in power along with a faster economic growth rate.

Yeah, I'd be shorting gold right now!

Barrick shuts hedge book as world gold supply runs out - Telegraph 

LOLOLOLOLOL

kcoop
I don't want to put you to work, please don't on my account. That's why I said it in a casual post instead of an e-mail, if you're poking around and it comes up in front of you then it's there in your idea bank (also under the legacy theme, I think the 'save' button should be above the comment preview so it doesn't dance around as the preview updates)

merchants of fear wrote:

Principal reductions would be fair in many cases

The single worst idea so far has been to change the tax treatment of loan forgiveness. The only time that loan forgiveness should not be a taxable event is in bankruptcy. It seems to me that the greatest risk right now has to be the strategic default. I think even the people with a strong sense of morality are going to have their patience tested. Give people a free pass vis a vis taxes is just one more incentive to walk away. My advice to anybody thinking of walking away- do it quickly before they change their midns.

,rad Oxtail,

My favorite strip-mall in West LA, had superb Greek, Oaxacan and Italian restaurants ($10-15 for dinner), one-stop dining.

kidbuck,
I agree defaults are the best 'market solution' in most cases for this bust phase of the bubble but if mods are offered, they should take into account...reality.

kidbuck wrote:

merchants of fear wrote:
The only 'economic' strategy that's going to work in slowing foreclosures and keeping people in their underwater bubble homes...

Why should the same people get to hog all the homes all the time? Let them default and become renters somewhere else. Then, when the >home reaches a reasonable price, a prudent person who has been patiently renting can have a turn.

I don't understand why this is so hard for people to grasp. The LAST people that should ever get any sort of handout are these underwater owners. Force those fuckers to pay back what they owe if they walk away and they'll start making their payments ASAP.

poic wrote:

China Signals It May Allow Currency to Rise Against Dollar - China * Asia * News * Story - CNBC.com

In other news physicists begrudgingly acknowledge 'gravity sucks'.

Sorry, klarek.

No, I don't think much of it is "good" at all.

But I do think that the tales of "strategic default" are somewhat exaggerated, as compared to the folks that quit paying simply because the checking account has run dry, and they are unemployed or unemployable.

I'll not overlook or excuse the individual bad behavior, particularly the reckless MEW we have all seen, but the reality for the banks is that they will be unable to recover these bad debts EVEN IF the loans are full recourse ... which in fact they are, in those states that allow deficiency judgments and collection activities on such accounts.

There is simply no money out there to support these defaulted obligations. The old saying is, "You can't get blood from a stone, no matter how hard you squeeze." It is impossible to collect from people who have lost everything, and you can't garnish the unemployed.

The states that take the view that seizure of the collateral is full extinguishment of the underlying debt are certainly free to change their laws going forward (I am leery of retroactive changes to law) but that itself alters the risk/reward calculus for both borrower and lender. In some states, old deficiency judgments sit around bothering the courts and judges for YEARS with only token sums collected ... the people are just flat broke, and there is no money to collect! You just hang onto the judgment, on the off-chance your judgment-debtor hits the Lotto, or something, I guess. Judges, clerks, lawyers, bailiffs, everyone hates these "dead" cases, and like LLiz tells us, they end up clogging up boxes stacked up in courthouse basements all over the place.

If the banks want to collect SOMETHING they have to realize that they are going to be unable to collect EVERYTHING.
That's all, I am just trying to take a pragmatic approach that salvages whatever we can out of the situation.
Otherwise, all is lost for both bank and borrower.

scone
I didn't say it is terrible they exist, but that is is terrible they have to exist. That there is genocide, famine, war, political conquest and other things that are the driving force.- EHP

History just doesn't work that way. In any case, most of the time war is not the original impulse to the diaspora, anyway. It's an end-stage as the wave of nomads passes through. If you look at the whole of human history, most of the nomadic movement is a result of environmental change in the constant search for food and resources. For example, the Nile Valley was settled by waves of people coming in from areas that were getting drier over time, such as the Sahara:

Predynastic Egypt - Wikipedia, the free encyclopedia

That doesn't apply to the Holocaust, obviously, but that's not the typical diaspora case over the last 10,000 years or so. The 20th c. is abnormal in many ways.

merchants of fear wrote:

I agree defaults are the best 'market solution' in most cases for this bust phase of the bubble but if mods are offered, they should take into account...reality.

You said that principal reductions are the only solution to foreclosures. I countered with a "shackle them to the banks losses" solution. What do you think?

klarek wrote:

I don't know if this is because of a lack of analytical/creative thinking or because they are run by incompetent pious thugs that promote other ignorant thugs into govt leadership positions, but I tend to believe it's the latter.

All the capable people left. Under the Shah it was something of a lootacracy so the smart ones got out when the getting was good. I was living in El Cerrito as a kid and some nice Iranians moved across the hall ca. 1976, waiting for their money to clear before they moved up into the hills...

rosethorn,
You can always take what I say and reproduce it in any way you like. My only preference is that it be provided in context, or with a link to the original context. The same goes for anyone who wants to slag me, I haven't been the most diplomatic of judges of character
edit: thanks for letting me know though, flattering

Comrade Troyski wrote:

What's wrong with this:
Daily Kos: Crash McCain

Primarily the fact that it's not true-

threetorches wrote:

the banks is that they will be unable to recover these bad debts EVEN IF the loans are full recourse ... which in fact they are, in those states that allow deficiency judgments and collection activities on such accounts.

There is simply no money out there to support these defaulted obligations. The old saying is, "You can't get blood from a stone, no matter how hard you squeeze." It is impossible to collect from people who have lost everything, and you can't garnish the unemployed.

I know plenty of people that are going to eventually default (some already have) where they aren't tapped out at all. They are gainfully employed, and either have a decent 401k/savings or a wealthy relative. I find the argument about "squeezing blood from a stone" to be highly irrelevant. Do student loans get erased because the graduating debtor has no money, therefore cannot be squeezed? It's more a measure to stop strategic defaulters (deadbeat gamblers), but will also get people to pay back what they owe. Is that too un-American to force people to repay their debts? We do it for student loans.

Klarek,
But most big banks anyway already have been paid for their losses...

Only because of World War 2, am I here in America. Different time, similar diaspora.

My father could have gone to Australia for free, but it cost $200 to come to the USA, and it looked more promising here, and most importantly in his decision: Australia didn't have any mountains, to speak of...

Armenians are quite fond of gold and jewelry as well. And they can get a little pissy if you accidentally call them Persians.

scone
I'm not saying it is possible to avoid them, it's like the weather. Even if I can't change it, I can still choose to dislike -40°C weather where your boogers freeze

klarek, as I said, it is mostly a matter of state law, and some states do indeed take your view and allow deficiency judgments up to the dollar value of the note. Other states view it as a "secured" loan, and allow the remedy of seizure of the asset borrowed against.

Essentially, they requrie satisfaction of the debt, and (but) consider the home to be full satisfaction. After all, it was the bank's own determination of the amount they were willing to lend, right?

Well, if that is how much the bank values the house at, then receipt of the house satisfies the debt. Fair is fair.

Comrade Troyski wrote:

All the capable people left. Under the Shah it was something of a lootacracy so the smart ones got out when the getting was good. I was living in El Cerrito as a kid and some nice Iranians moved across the hall ca. 1976, waiting for their money to clear before they moved up into the hills...

I don't think so. I see no difference in Iranians I see protesting in the streets than I do the ones that could have gotten out and did. They're just the ones without the money to leave, or have stayed because they would rather hope for Iran to change than ever leave there. But the point is that this "old money" argument lost credibility at some point in the past. Iranian prominence in academia, science, and engineering in the western wordl isn't a fluke. And they don't have the relative "strength by numbers" explanation afforded to the Indians and Chinese.

threetorches wrote:

klarek, as I said, it is mostly a matter of state law, and some states do indeed take your view and allow deficiency judgments up to the dollar value of the note. Other states view it as a "secured" loan, and allow the remedy of seizure of the asset borrowed against.

Essentially, they requrie satisfaction of the debt, and consider the home to be full satisfaction. After all, it was the bank's own determination of the amount they were willing to lend, right?

Well, if that is how much the bank values the house at, then receipt of the house satisfies the debt. Fair is fair.

I'm not talking about the law as it is. I'm talking about what a practical "solution" is to the problem of foreclosures (which I don't have a problem with, and am just stating hypothetically). This would be in better context if the govt was forcing banks to reduce principal owed, like in the cramdown rumors of past.

But on a purely practical level, principal reductions are the worst possible "solution". If you want to stop foreclosures, you need a system where people are punished for not paying back what they owe. That won't stop all foreclosures, but a substantial amount to the point that it won't be a "problem". If we can force poor college graduates to carry a $100,000 debt on their shoulders when they graduate, surely we can do the same to a guy that walks away from his house and sacks the bank with an equal debt (note: not talking about the amount owed on balance, just the amount the banks lose from foreclosure).

Again this is outside the debate about the law, just a practical solution. Principal reduction is a no-go every way I look at it.

Klarek,
You seem to forget many people have tried to work it out and stay in their homes but the banks said 'NO' to the work-outs...

feralpig wrote:

Nondischargeability of student loans in bankruptcy is despicable.

Unfortunately, it's the result of abuse by people that took huge loans to go to Harvard and become doctors, and then subsequently blew off paying for their loans.