New Orleans I’ve been harping on the drastic need for lenders (banks and their buddies) to write down significant parts of the homeowners’ outstanding balance to right size loans and prevent foreclosures, so I read an article in the Wall Street Journal by James Hagerty yesterday with eager anticipation hoping to find the industry was finally moving my way. Unfortunately, most of it was a restatement of old positions in a new framework.
There were some new voices speaking plainly though.
“Laurie Goodman, a senior managing director at mortgage-bond trader Amherst Securities Group LP, estimates 7.1 million of the 7.9 million households now behind on their mortgage payments will lose their homes to foreclosure if nothing is done to change current loan-modification programs. “Principal reduction is the only answer,” she says.”
But for many the chairs in the church haven’t changed. Bruce Marks of NACA and John Taylor of the National Community Reinvestment Coalition have been long allies, and not surprisingly their position mirrors mine: there have to be write downs. Jack Schakett, formerly of Countrywide and now in about the same job with Bank of America concedes, as he always has, that there is a place for write downs, and believes they should be extended. Wells Fargo, as always, continues to keep its head in the mud and believe that someone else will solve the problem they helped create.