[Pearls Before Swine]

this way they can write off the loan at face value too

Yeah, but isn't that what they've been trying to avoid, because of the hits to earnings and equity?

[BooBoo1000]

I retired from The Prudential Insurance Company. In the 1930 depression Prudential had the mortgage on 1/3 of all of the houses in the U.S.Things looked bad, and Pru\didn't want all of those house setting empty. So Pru made a deal with the home owners. They would stop all payments until times got better. Prue would furnish the home owners with the needed paint and brushes, and needed repairs,The home owners would keep the house up. Then when times became better Prue went back and re-amortized the homes with a payment the owners could pay.In all of those years Prue only lost money on one Property the Opera House in Steam Boat Springs in Colorado, we just could not sell that dog. Perhaps our leaders should think along these lines instead of all of the foreclosed proprieties.

[Chode]

it's all beyond me... if they had renegotiated the loans the people still working would prolly still be in some of the houses making payments, now they are only worth bulldozing

[CowboyJay]

"Yeah, but isn't that what they've been trying to avoid, because of the hits to earnings and equity?"

What they're really trying to avoid is the loss in overall value to their portfolio if they have to attach realistic valuations. They'd rather write off a loss at face value than sell at half that value. So perversely, turning what used to be a functional dwelling into a hole in the ground is preferable to selling it to someone for whom it would have utility. I predicted this behaviour 3-4 years ago. Frustrating waste of resources.