With housing prices down nearly 30% nationwide, and foreclosure costs averaging $50,000, banks could afford significant principal reductions and still come out ahead. However, borrower advocates contend that many mods in fact reduce interest, but unless the principal is cut, the reduction in payments is insufficient
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Housing is down 40-50% where I am ,, simply going from 6.5% to 4.5% is meaningless when you’re 100-150K or more upside down with no hope for recovery in the near term cards... unless the actual cost of “owning” approximates rental costs for the same property the current program will continue to fail.
The vast majority of people who are upside down on their homes, refinancied several times, pulled out lots of money, and used it to finance their lifestyle..cars, trips, etc...just drive through any new development in Florida..I’d say that 90% of all homes with FOR SALE signs in the front yard also have a big assed SUV AND a boat in the driveway..