"Anonymous Sender" <anonymous@[EMAIL PROTECTED]
> wrote in message ...
> "Although lenders and servicers have scaled up their efforts and
> adopted a wide stance of loss-mitigation techniques, more can, and
> should, be done," Bernanke told a meeting of the Independent
> Community Bankers of America.
> "Principal reductions that restore some equity for the homeowner
> may be a relatively more effective means of avoiding delinquency
> and foreclosure."
If a person is having trouble paying his mortgage (and he has no assets
for
the bank to seize) then usually the bank will talk to him and try to
compromise, usually by reducing his monthly payments. But the bank also
wants to keep the original loan going, so the homeowner actually owes more
and more over time. The bank hopes that after a year or two, the
homeowner's
income will improve, so he can eventually pay off the whole loan.
But that rarely happens. People who are in trouble now (can't pay the
mortgage, the loan amount is higher than the house price) would rather
default. So the banks will have to write down the loan amount, in order
for
the homeowner to repay it.
Dan in Philly
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