For rental properties and 2nd homes, you already can.

What’s more, this was changed around 30 years ago, before that, you could do cram downs, and the argument of the mortgage bankers was that because MORTGAGES WERE SO TIGHTLY REGULATED, the benefit of cram-downs were minimal.

Also, note that many of the mortgages in the US are sliced and diced among so many people that a modification by any other way is essentially impossible.

I don’t think the bankruptcy option is nearly as attractive as people make it out to be for borrowers.

I’m not sure who it hurts more the borrowers or the lenders. What would happen if a flood of Americans all went bankrupt at the same time. I can see why the bankers are panicking and trying to bail the nation out of that situation. The credit game would come to a dead stop for a lot of people. No borrowing and no lending to these folks for a while. How would the bankers keep ahead of the rest of us ‘regular’ investors without a crop to regularly harvest? They’d have to trade for a living like the rest of us. Good luck with that. Next you’ll be telling me MSFT will start coming up with it’s own software ideas. (;

w/this: “Those who lend money out to someone who could not afford it, deserve to lose money..”

While I hear your intended meaning, you/we should understand that No Money was ever lent to the ‘home-debtor’.

That Fact is a huge part of the Reason that this ‘problem’, RE Bubble, Bubbles previous, even exists, in the first place.

and, this: “Unfortunately the poor are not smart enough to look through all this neo-con propaganda”–I’m not sure that the ‘neocons’ were alone in this, though it shorter than ‘neo-lib/con’, even that may be a misdirection.
I think we need to recall: “Good evening, my fellow Americans: First, I should like to express my gratitude to the radio and television networks for the opportunity they have given me over the years to bring reports and messages to our nation. My special thanks go to them for the opportunity of addressing you this evening.
Three days from now, after a half century of service of our country, I shall lay down the responsibilities of office as, in traditional and solemn ceremony, the authority of the Presidency is vested in my successor.

This evening I come to you with a message of leave-taking and farewell, and to share a few final thoughts with you, my countrymen.
…
Until the latest of our world conflicts, the United States had no armaments industry. American makers of plowshares could, with time and as required, make swords as well. But now we can no longer risk emergency improvisation of national defense; we have been compelled to create a permanent armaments industry of vast proportions. Added to this, three and a half million men and women are directly engaged in the defense establishment. We annually spend on military security more than the net income of all United States corporations. American makers of plowshares could, with time and as required, make swords as well. But now we can no longer risk emergency improvisation of national defense; we have been compelled to create a permanent armaments industry of vast proportions.

This conjunction of an immense military establishment and a large arms industry is new in the American experience. The total influence – economic, political, even spiritual – is felt in every city, every Statehouse, every office of the Federal government. We recognize the imperative need for this development. Yet we must not fail to comprehend its grave implications. Our toil, resources and livelihood are all involved; so is the very structure of our society.

In the councils of government, we must guard against the acquisition of unwarranted influence, whether sought or unsought, by the military-industrial complex. The potential for the disastrous rise of misplaced power exists and will persist.

We must never let the weight of this combination endanger our liberties or democratic processes. We should take nothing for granted. Only an alert and knowledgeable citizenry can compel the proper meshing of the huge industrial and military machinery of defense with our peaceful methods and goals, so that security and liberty may prosper together.

Akin to, and largely responsible for the sweeping changes in our industrial-military posture, has been the technological revolution during recent decades.

In this revolution, research has become central, it also becomes more formalized, complex, and costly. A steadily increasing share is conducted for, by, or at the direction of, the Federal government.

Today, the solitary inventor, tinkering in his shop, has been overshadowed by task forces of scientists in laboratories and testing fields. In the same fashion, the free university, historically the fountainhead of free ideas and scientific discovery, has experienced a revolution in the conduct of research. Partly because of the huge costs involved, a government contract becomes virtually a substitute for intellectual curiosity. For every old blackboard there are now hundreds of new electronic computers.

The prospect of domination of the nation’s scholars by Federal employment, project allocations, and the power of money is ever present – and is gravely to be regarded.

Yet, in holding scientific research and discovery in respect, as we should, we must also be alert to the equal and opposite danger that public policy could itself become the captive of a scientific-technological elite.

It is the task of statesmanship to mold, to balance, and to integrate these and other forces, new and old, within the principles of our democratic system – ever aiming toward the supreme goals of our free society.

Another factor in maintaining balance involves the element of time. As we peer into society’s future, we – you and I, and our government – must avoid the impulse to live only for today, plundering for, for our own ease and convenience, the precious resources of tomorrow. We cannot mortgage the material assets of our grandchildren without asking the loss also of their political and spiritual heritage. We want democracy to survive for all generations to come, not to become the insolvent phantom of tomorrow.
…”
Eisenhower’s Farewell Address to the Nation
January 17, 1961
http://mcadams.posc.mu.edu/ike.htm

Past that, nice take~

So what happens when a judge modifies a mortgage that is rolled into a CDO? My guess is a lawsuit all to the way to the Supreme Court over that modification. As usual, the lawyers will make out. A while back I remember hearing an NPR story where they interviewed someone who owned some of these assets, and he made it clear he would fight any modification and that the contracts specifically forbid modification.

For those who are so worried that their “irresponsible” naboers get something out of these arrangements remember that it’s your home value that is being saved on those peoples back. It would be a heck of a lot better for people who are “under water” to simply stop paying and wait to be kicked out of the house. By the time they finally get kicked out, they could have saved enough money for a 3 month deposit on renting the same house for half the monthly payment. After a couple of years renting the house they could save up enough money to make a 20% downpayment on the house which by then would be selling for half of what they originally payed for it the first time. By saying yes to all these draconian “work-outs”, rather than just making use of the applicable contract laws, they are saving your a$$ and home value – not their own.

All of these “bail-outs” of “irresponsible” or “predatory” borrowers are for the benefit of the rich and the investors. One way or another they all seem to cram the victims of predatory lending into the shitter, with the government sitting on the lid so they can’t get out. All of it of course being sold as a bleading heart liberal “tax-me-and-give-my-money-to-the-immoral-poor” scheme by our neo-con corporate media machine. Unfortunately the poor are not smart enough to look through all this neo-con propaganda, or they would be revolting.

Unintended consequences of the theft from banks by the United States government include the little old lady whose only source of income has been from waiting on tables for her entire life. Her life-long savings have been 1) a money market account at a local bank, and 2) a small equities investment in The Bank of America.

During the past two years, her stock investment has shrunk by 74% and her Money Market is now earning 1.8%. Yet, our government is not contemplating providing no relief for her, but is contemplating tens of thousands of dollars relief for people who have ‘lived up to the Jones’.

If this old lady were to lose her cool, and took an form of extreme action against her government, and if I were sitting on a jury, I would be morally obliged to acquit her of any action that she had taken.

And as far as “mark of a free society”, maybe you’ll be able to appreciate your situation . I’m one of those conservatives that figures all societies are feudal — despite disguises. Notice the King has opened the grain stores for the chosen.