Slipper Slope for Bagholders of America
Great post at Blown Mortgage on the slippery slope of principal reductions at Bagholders of America, and what it means industry wide.
Key question: why will others bother to keep current on their mortgage payments if they know that refusing to pay for long enough will muscle the banks into reducing the principal?
(And let's also ask, why is the government encouraging this behavior by making such reductions tax-free income? And finally, what does this do to real "prices" reported by the RE industry if we know that the numbers those "comps" are built on are bogus, because they don't report principal writedowns made by the banks subsequent to the sale?)
Is Bank of America headed towards principal reductions? [more]