That’s exactly the problem here. The Dems are insisting this package have some sort of homeowner foreclosure protection, keeping them in their homes by use of some sort of loan amount decrease.

This is a HUGE mistake. Anyone, even those that are in positive equity positions will consider stopping their payments and fraudulently “working” the system to get loan modifications.

This will have massive valuation consequences down the road. The govt. think they are helping the RE markets by curtailing foreclosures, but all this will accomplish is expedient mark to market revaluation.

The biggest impact is on all of those people that live on the same block with older mortgages. Their houses will now be worth 100’s of thousands of dollars less.