I hate to see fools being rewarded for their ignorance, but the only “loan modification” I support is either fixing the interest rate for the entire term of the fully-amortizing loan OR writing-down the principal amount. Thing is, the write-downs NEED to be used as comps for future purchases, as the new principal amount would be the correct market price.
Lenders should be able to choose between principal write-downs or foreclosures. Also, the FBs should have an unsecured loan for the amount that’s written-down, and the lender should be entitled to any amount received up to the original loan amount in any future sale to satisfy this loan. The lenders should not be able to carry these new unsecured loans as assets — they should be kept off their balance sheets since nobody knows when or if they will ever be repaid.
