[longtermmemmory]

you forgot lender created artificially high home prices.

Homes which should have been 50-150k were/ARE inflated to 300-600k.

the lenders are still making out. The recieve 1k per year a loan is modified and remains paid AND 1k for the start up.

few if any banks are doing principle reduction DESPITE HAVING BEEN COMPENSATED TO DO SO. (see bank of america, citibank, chase...)

[illiac]

The lenders did not artificially inflate home values - they do not have that ability. In our market, housing values raised dramatically because of a large number of investors coming in to the area and paying outlandish prices for homes (mostly all new homes). The home builder kept raising prices and the investors kept buying.

Since the values were up, appraisers had those sales to use as comparables in an appraisal (they often had no choice because they have to use what has sold in the appraisal report).

Thus, home values were artificially raised by investors who kept paying more and more for homes - we even had bidding wars in our area which kept raising prices.