It looks like we may soon have legislation that allows bankruptcy judges to reduce principal amounts on mortgages. This type of cram down powers for bankruptcy judges are not especially unusual but to some are quite welcome in the residential mortgage arena. Yet perhaps not too welcome to banks. Good news, banks will perhaps be more willing to modify loans. Bad news, they may be less willing to give new ones. And by the way, a lot of the problem with loan modifications has not been banks but the securitization process. The entities servicing these loans have limited ability to modify loans as they are contractually controlled in what they can do, so the desired effect on loan mods may be elusive.
http://online.wsj.com/article/SB123309817136221693.htmlOverall, however, this I view as a good thing, as does others.
http://www.calculatedriskblog.com/2009/01/house-panel-approves-cram-downs.htmlThe rest of the news is not particularly dismal or inspiring, but I do want to leave you with this nice chart on home prices. You decide if we are at a bottom yet:
The interesting thing for me is that I had this chart with a lot of others and I had a hard time finding it as they all seem to have this downward trajectory at the end, also known as cliff diving. It just blended in. I guess, not time just yet to get all warm and fuzzy.
Disclosures: None
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