I hate to say this, but instead of all the crap they’ve tried to do to fix the housing market, we’d have been better off, both in overall cost, and effectiveness, to subsidize loan modifications where principal was reduced (to reduce walkaways) in the first place.
Not saying I *like* that idea either, but it would have been more effective.
I know most mods now fail, but that’s based more on how they’re done and for whom (i.e., they’re only done for people who really can’t afford the house no matter what and already have credit issues from the get-go) than anything else.
Here’s an idea...why let added debt to a refinanced mortgage or an equity loan be included in the foreclosure, or better stated, why can’t the lender obtain a judgement for collection on the amount over the purchase money mortgage amount? Too many people walking away scott free from their personal decisions and obligations...at the rest of our expense.
I could get behind requiring something akin to the “gap insurance” offered on auto loans to cover a shortfall in value. This would be required in addition to PMI on low downpayment loans going forward.
Any such proposal would have to be turned inside out by *business people* without the remotest hint of a conflict before enacting, though.
I’ve long had the sneaking suspicion that certain quasigovernmental agencies knew quite well the potential for fraud and didn’t exactly discourage it. Just another way to redistribute wealth.