“distressed homeowners will simply refinance out of whatever mess they are in.”
I think this is a strategy also…I wonder if the banks know this –or the gov’t or both…even newer exotic loans to cushion foreclosures.
However, in a scenario like this — banks still want a profit. Refinancing to someone who cannot afford the house in the first place, does not guarantee the bank will make their $ in the long run. Is it that easy to refinance out of a mess –ie, a $500K house that you cannot afford in the first place? It seems to me it could only work if the banks reduce the payments, keep interest rates very low and wait 100 years for the home to be payed for.
