My intitial thoughts on a bail out are quite colorful, but if you think about it…

– How many people can lenders really afford to bail out? It’s certainly limited.
– Then, how many people in foreclosure can actually qualify for a refi under the new restrictions? AKA traditional standards.
– Since mortgages are so heavily traded, how much bailing out are the investors going to allow? The article mentioned forgiving the principal. That won’t last long.

As the article says:
“It’s really up to servicers in this climate, he said. “If the servicers aren’t flexible, then we’re going to see credit losses like we’ve never seen before.”

The other thing, is this is by no means limited to sub-prime lenders. People won’t want to touch the housing market with a ten foot pole once the reality of the situation sets in.