Excellent post, analyst! IMHO, you are exactly on target.
One thing to consider outside of this, is if the eventual purchasers — of securities that control the mortgages — buy the assets for 30 cents on the dollar, they can go to the home debtors and reduce their principal by 50%, repackage the loan and sell it on the secondary market for 50% of its original value. The private equity guys make their spread, the home debtor now has a mortgage cram-down, and the taxpayer foots the bill.
Perhaps this is their plan after all? Everyone but the taxpayer wins!
