No Bottom in House Prices Until Government Admits It.
Again, that's what this story explains.
"Obama has committed at least $50 billion in guarantees for lenders that negotiate new mortgage terms, and proposes putting taxpayer funds at risk for half of $444 billion of loans that would be modified this year. Fifty-eight percent of the modifications made during the first quarter of 2008 ended up back in default, according to the U.S. Treasury’s Office of the Comptroller of the Currency. Unless lenders cut principal owed to reflect the current market value of properties, the same thing may happen this year, Miller said."
That last bit is the important part. Comrades Bair and Obama, along with Comrade Johnny Issacson (Ga.) talk about putting a floor under home prices, but the only way to stem to walkaways and foreclosures is to do the opposite -- drop the real floor out from under the inflated prices of the recent past so that people can afford the houses they bought.
Leaving aside whether or not this is fair, or a good idea (I say "no" and "no") it does allow us to see that there's simply no way to avoid adjusting prices downward. The market will do it for us, and any loan mod program will do the same thing.
Now, when will the crooked National Association of Realtors finally admit this?