As I said earlier the only way out of much of this mess is to reduce the principle owed on many homes. Bank of America seems to have finally seen the light. The question obviously becomes what process is going to be used. Bankruptcy Courts have been doing this type of analysis for a long time in Chapter 13 and 11′s. Maybe Obama will begin pushing for this through the Federal Reserve or the new Fannie Mae/Freddie Mac entities.
Who knows but until principle reduction begins to happen too many people are stuck in homes where they owe more than the home is worth. Sooner or later home owners will abandon the home to foreclosure leaving banks with a lot of houses to sell.
By DAVID STREITFELD and LOUISE STORY
Bank of America said that it would begin forgiving some mortgage debt of borrowers who could lose their homes.