Why will bank make loans in the future if notes can be modified.

Discussion in 'Economics' started by prc117f, Mar 3, 2009.

  1. prc117f


    If the mortgage facevalue can be modified if someone declares BK

    wont that drop the amout of financing for new homes and probably increase interest rates to make up for this new risk?
  2. :eek:
  3. What's the difference between a judge dropping the mortgage down to market value versus the bank foreclosing and selling the house at market value? Nothing. In either case the bank gets a partial payoff and takes a loss.

    The neighborhood wins because there's no forced sale that lowers comps and lowers home values. The homeowner gets to stay in the house he or she bankrupted on. Helps reduce homelessness.
  4. You make it sound like a win-win-win situation.
  5. What's the difference? You mean other than the bank got to choose what it wanted to do with it's own mortgage? I know this may surprise you, but we have property rights in this country...at least we did until the Obama administration showed up.