I work with people in bankruptcy to refinance them to avoid foreclosure and in many cases try to get the lender to accept a payoff based on the current value of the home or to modify the borrower's loan, to make it an affordable loan, which pays off the debt to the lender.
I have watched time after time, as the lender proceeded with foreclosure, resulting in a DRASTIC loss for the lender when other alternatives would be much more profitable for the lender.
I have not seen any willingness on the part of the banks to consider decisions that can help to control the losses sustained by their portfolios, and yet petition for assistance from the government without making efforts to make their businesses more salient.
It is even more frustrating to see a plan to allow Bankruptcy courts the power to Cram down the balance of the loan based on Current values.
This sounds like a good deal, and individually, people will benefit.
HOWEVER, our entire economy is based on the value of these Lenders portfolios of loans, the sudden loss in value that would occur, would eliminate any kind of Credit. No banks would extend credit in any form with losses that huge, retail purchasing will stop and our mostly imaginary dollars value will evaporate.
We would be reduced to a barter system.
That sounds extreme, but it is literally why the government has leapt to aid our failing financial system. The banks are just not doing their part.











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