In a free market, it matters very much what the buyers feel is appropriate or fair. As they are the people that make the part of the market that matters. They spend the money. If the govt screws with the loans or makes it so the lenders screw with the loans, they better keep the potential buyers in mind. Because if buyers feel it’s a lousy deal, there goes your market. It will hang in limbo. And will still eventually come down.
Lenders are avoiding any changes right now because it’s all bad for them to recognize any of it. So delaying tactics are the order of the day. Looking the other way until a bailout or something changes things for the better. Or perhaps until management can leave the positions.But nothing except a market correction will do this. They may somehow inflate out of it, but that’s still a correction in real money.
