On related fronts, I see that Rep. Waters’ HFS Subcommittee on Housing and Community Opportunity had a hearing this past week to find out what the hold-up on mods under the Making Home Affordable Program has been. Seems that six months into the program, only 15% of the 2.7MM eligible have been assisted.

At that hearing* HFS chairman Barney Frank expressed an interest in reviving attempts to restore the mortgage cramdown option to bankruptcy law.

It is paralyzingly obvious that the cramdown is the only way to give the borrower a little leverage in the process, albeit costly leverage in that they’d have to declare bankruptcy. Therefore, of course, banks or other holders of the loan asset would then be forced to recognize a loss immediately, which is all you need to know about what the obstacle has been, against all common sense.

[rummage, rummage] Ah yes: Here’s a recent post from CR on the subject, which is evidently one of the places where I saw mention of the possible return of cramdowns. There is also a link to an excellent article on the subject from CR’s late blogging partner Tanta, who was a mortgage industry pro.

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* I thought it was a different story, just found out in checking it that Frank’s remark was made at the hearing.

There aren’t the good jobs out there, if you’re middle-aged and already highly skilled. Companies will hire some people as managers, but mostly they don’t want people who have much experience. especially if you’re in a technical field, like computers, they want young and cheap.

This might also be of interest:
An interview with Phil Angelides.

As for greed, I’m well aware of how the system works — I’ve got a degree in economics to go with my theology degrees. I went to school with some of these folks, and know precisely what motivates them.

And so does Sheila Bair.

That press release doesn’t say “Gosh, let’s all help out the poor suffering homeowners.” It says “You’re in this for the money? Fine — but let’s review the facts: foreclosures are more costly to you in the long run than revising mortgages would be.” She appeals to their greed (or as they would prefer to say, “their trust in the market forces”), and dares them to run the numbers.

If they try this, and come to see that she’s right — they do make more money by reworking the loans rather than paying the lawyers, the court costs, the sheriffs, the county clerks, the real estate listing agents, and everyone else who gets a slice of the foreclosure pie — they might be more amenable to trying the same thing with people who have “exotic” mortgage instruments.

Foreclosures aren’t cheap, and she’s trying to remind them of that — for everyone’s sake.

Appreciate the post and encourage you to keep posting but this “if Bair can get banks to toss their resistance to ANY kind of mortgage modifications out the window” is truly not cognizant of the greed that runs these institutions.

Hugh is ABSOLUTELY correct in stating “If we could see the banks’ books and evaluated their assets at mark to market prices, the whole financial sector would, almost without exception, be exposed as bankrupt.” AND meanwhile the perpetuators of the fraud that has occurred are escaping justice.

People are not being evicted at foreclosure, sometimes spending a year or two in the homes, leaving them responsible for upkeep and taxes, so it pays for the bank to do this. Also, it might be the reason that bank vice president moved into the fancy palace in Malibu – free digs courtesy of the lender who just wants the place kept up.

And as Peterr points out, loss sharing would be a great step in the direction of reviving our consumer economy.