[quote=CA renter]Actually, if principal amounts are reduced, that should be noted in public records, and it should be mandated that future appraisals use these as comps.

After all, that was the real purchase price of the house, not the original, artificially-inflated price. The “written-down” price is the actual price the buyer could afford; therefore, it is the true sales price. [/quote]

This was my belief as well. I think principal reductions would really accelerate the decline since it automatically cuts the value to whatever an actual borrower could afford. I can’t imagine this not being used in appraisals.

In the end I really don’t think it matters what happens with the government and all these plans. Prices will fall to levels that people can afford with fixed mortgages. Maybe it’ll take 15 years, maybe 3. But it has to happen. There is no way around it.