Ed's Blog

When I read a few days ago that Bank of America was going to reduce the principal balance on up to 45,000 home loans you could have knocked me over with a feather!

What a novel concept! Help keep homeowners motivated to stay in their homes and paying their mortgages when they are so far underwater that they can't even see the light above. And they see their neighbors walking away from their mortgages right and left.

This idea was floated at least a couple of years ago when it actually could have done much more good for the economy. But there was great handwringing over moral hazard and other dairy I say “quaint” notions that used to be operative. But these have been tossed out the window by a steady stream of bad news and despair for homeowners who otherwise would most likely hang in there and “do the right thing.”

After helping create the bubble by lending with reckless abandon, foreclosing in massive numbers, and telling homeowners who wanted workouts to pound salt, some lender was bound to think, “There has to be a better way out of this.”

Congratulations to BofA. I hope their program works and that other lenders follow suit.

We need all the help we can get to get this housing market mess straightened out. Especially in hard-hit states like California, Arizona, Nevada, Florida, and others.