12/27/2023 0 Comments Principal writedown![]() Yet because accounting rules allow holders of these seconds to carry the loans at artificially high values, many refuse to acknowledge the losses and write down the loans, which would allow willing first lien holders to reduce principal and keep borrowers in their homes. Large numbers of these second liens have no real economic value – the first liens are well underwater, and the prospect for any real return on the seconds is negligible. The problem of second-lien mortgages standing in the way of successful principal reduction modifications has reached a critical stage and requires immediate attention from your institutions. According to investors, Administration officials, and other experts I have consulted, holders of second-lien mortgages are now a principal obstacle to many modifications. With the interests of homeowners and investors aligned in this way, it should follow that large numbers of principal-reduction modifications could be made relatively quickly. Many investors in first-lien mortgages have indicated that they are willing to accept the fact of significant losses on those investments in order to move on and use their money for other purposes, rather than having it locked in underwater mortgages with a high and growing likelihood of foreclosure. (3) And Barney Frank released a letter to the four largest banks, centered around this language (my bold): ![]() So if you find the page itself a little overwhelming, or think you are missing most of the better financial reporting as it gets buried quickly, your rss feed reader will catch it for you.) Here’s a little secret about Huffington Post – you can rss feed specific reporters off their page. (Are you reading Shahien’s work? You should, he’s doing great work on financial issues he was the one who caught the modifcations -> 70% more underwater issue. As the said, we are looking at a number of tweaks to existing programs to help reach more borrowers.” (2) Shahien Nasiripour had a comment about principal write-downs walked back on him by Treasury: “Treasury is NOT poised to roll out a major principal write-down program. Three things happened in a row yesterday: (1) Two positive profiles of Timothy Geithner ( New Yorker, and The Atlantic) came out, both working under the assumption that the stress tests of last year worked.
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