Let’s say you are a bank, back in late 2004, you loaned $500,000 to someone. They paid up until about June this year, then fell behind. As a bank which would you prefer?
a) Rework the loan for $550,000 for the next thirty years at 5%, which the bag-holders appear to have the capability of paying.
b) foreclose, liquidate the property for probably $400,000?
