AK, good post. I wonder if it will be a delay or if it will end up dampening the blow.
This is an approach that could dramatically soften the blow, IF a) more banks take this approach, b) borrowers are accessible enough to communicate with, and c) It makes econimic sense for those holding the mortgages.
Basically, while folks like myself (a renter) would like to see significant corrections in property values, especially in bubblicious SD, the Powerful folks are all in alignment with one another. Here’s what I mean – The Banks and Wallstreet folks have the government lawmakers in their pockets. Agreed? The government has historically encouraged home ownership (Tax deductions for interest, preferential conditions for first-time buyers…)Many/most people if given a shot at a fair market value for a home, would/did take out a mortgage for one. If the prices were more reasonable, I would too.
So, on one side we have: Banking/mortgage industry, Wallstreet, myriad of RE-dependent small, medium, large industries,and last but not least – home owners. And I probably left out many others.
Who does that leave on the “Other side” of the issue:
Renters (like me) licking their wounds for not catching a ride on the last upswing. There are bound to be some others, but I can’t think of any right now.
But, basically, all the might is on the side of business/government/homeowners. The cards are stacked in their favor.
However, if banks have indeed over-extended themselves and their’s just too much speculative value in homes for them to negotiate away, then the possible significant correction we talk about on this blog every day could take place…..
