Not that Simple

I came across this brief article this morning and thought it was worth sharing:

Reworking Troubled Mortgages Isn't That Simple

In order to rework troubled mortgage, the government may have to do
morethan persuade lenders and investors that workouts are ultimately more
profitablethan foreclosure, analysts conclude.

Hundreds of investors hold an interest in trusts that invest in
mortgages.If loans are reworked, some of those investors will lose money.
Mortgageservicers are prohibited from modifying a pool of loans without getting
the OKfrom two-thirds of the investors. That nod can be difficult to get because
someinvestors stand to make more from foreclosure.

Many observers and government officials are pointing out that it will
takegovernment action to nullify or supersede investor interests. If the
governmentstepped in and, perhaps, gave less-favorable tax status to an investor
thatdidn’t agree to accept a modification, there would certainly be lots
oflitigation and the government might have to reimburse investors for value
theylost, analysts say.

Therefore, some analysts conclude that the best answer is to givebankruptcy
judges the right to cut the interest rate or reduce the principalowed on a
debtor’s troubled mortgage.

Source: www.realtor.org

It never ceases to amaze me how large and diverse our economy is. The fact that the government has allocated $750 billion to work on the credit crisis is not enough, we can’t just buy or way out of this mess. There has to be a well developed and thoughtful plan created by a broad cross section of business and political leaders and I only see a shoot from the hip approach.