I didn’t read the text of the bill, but where is the bank’s incentive to write down the debt? Why not just foreclose and attempt to get full market value rather than writing down lower so the borrower is no longer underwater?
Foreclosing involves significant expenses (legal and otherwise), loss of income during 7+ months between the day the homedebtor stops paying and the day you can try to sell the house at a trustee sale, and the risk that the homedebtor trashes the property on the way out. It is not feasible to recover full market value through foreclosure. Getting 85% of FMV in cold hard cash today may be a better option.
