Real Estate Blog

The New York Post is reporting that a large sovereign wealth fund is angling to buy up US property on the cheap.  With a weak dollar and REO piling up, these foreign funds are looking for 50-cents on the dollar discounts in American residential and multi-family property.

Sovereign wealth funds are well-known for their high-profile purchase of American assets like the Chrysler Building in NY, but now they’re expanding to pick-up foreclosed properties at a huge discount.

With large-scale property acquisition Americans will be saddled with the debt of their excess while the property asset resides in the portfolio of a foreign state.  We’ve outsourced everything - we might as well start outsourcing our property as well.

From the New York Post:

There’s a new land grab starting in America.

Foreign money, which up to now has focused its attention on investing in iconic commercial real estate - like Barneys New York and the Chrysler Building - is now moving to scoop up tens of thousands of discounted foreclosed homes across the country.

One sovereign fund, said to have earmarked $29 billion to purchase foreclosed residential real estate, recently hired a West Coast mortgage broker and is starting to search for bargains, The Post has learned.

The search, which is being carried out, in part, by Field Check Group mortgage consultant Mark Hanson, who was retained by the broker, Steve Iversen, is concentrating on single- and multi-family REO (real estate owned) homes, or homes that have already been taken over by the mortgagee.

Neither Iversen nor Hanson would disclose the name of the client, but sources told The Post it’s a sovereign fund.

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American consumers, left with the debt and none of the assets

I’ve been reading a lot of articles on the Web these days with different groups blaming each other for the collapse of the housing market.  It’s annoying.  The housing collapse and credit crunch are too big and too wide-reaching for it just to be the fault of one group.  There was greed at all levels of what I’m terming the Pyramid of Greed.

From home owners maxing out their cash-out refis to real estate agents encouraging buyers to “stretch” to mortgage brokers manipulating W2’s the greed went up and up and up right to the office of the President.

So from now on, for those on this pyramid, please refrain from absolving yourself of any culpability in this mess.  If you’re on this pyramid you played a part.

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Pyramid of Greed

Small banks may be exposed to nearly $300 billion in bad construction loans granted to local builders and developers according to a new report by the Wall Street Journal.  The report estimates that more than 150 local banks could fail under the weight of the defaults.

Construction loans are dicey propositions in the crashing housing market as builders who bet on repaying loans with sold properties may be unable to repay the debt obligations on the existing projects.  Some projects are probably already abandoned and others will sell for pennies on the dollar leaving developers insolvent.

Further, because banks often allow developers to hold off on interest payments during construction the true ability of the developer to repay is often not known until it is too late.

More on the small bank crisis from Market Watch:

Small banks have some $280 billion of outstanding construction loans and analysts have predicted that as many as 150 smaller banks could fail in coming years after betting heavily on construction loans, The Wall Street Journal reported.

The practice of allowing real estate developers to delay paying construction-loan interest has raised alarms with regulators concerned that smaller banks are masking potential problem loans, the paper said.

Increasingly popular during the building boom of the last decade, many of these loans allowed banks to calculate the interest that would be paid on the loan overall and then set aside that amount in “interest reserves,” essentially allowing the banks to pay themselves until the property becomes profitable or the loan is paid off.

The loan can then be marked as a performing loan even if the project if it is financing is failing, a practice that concerns regulators, the report said.

But the tanking housing market means many of these projects may not be built — or even financed — leaving banks, and their investors, holding the bag.

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Small banks may be crippled by construction loans

Maybe the politicians think that with everyone getting ready for 4th or July that the news of a sleight-of-hand bailout bill won’t raise too many eyebrows.  Maybe they’re wrong (again).  With the holiday fast approaching legislators in both the House and Senate are getting ready to put through the mother of all mortgage bail out bills in an attempt to stave off the further decimation of the housing market.

What a surprise.  All the rhetoric from last summer goes out the window as the market worsens and votes become more precious.  Legislators have decided to mortgage each of our futures with the tax of the ignorant and greedy.

The bill, called “the most sweeping mortgage reform since the New Deal,” has a ton of bail out provisions loaded in - giving lenders and borrowers the ability to just pass over the risk of bad mortgage debts to Fannie, Freddie and the Federal Housing Administration.  In otherwords, the taxpayers of the United States of America.

Your bail out bill grab bag includes:

• permanent conventional loan limit increases from $417,000 to $625,000
• tax credit for first time homebuyers for $8k or 10% of the home’s value (for unoccupied homes)
• $150 million in foreclosure counseling funds
• “stricter” guidelines on lender disclosure of ARM loans
• up to $900 million for the Affordable Housing Trust Fund to be financed by fees from Fannie and Freddie
• rescue refinancing which allows distressed borrowers to refinance in to a federally guaranteed 30-year fixed loan at 85% LTV from wherever they sit currently with their lender

Take a look at that last one.  Even with the requirements attached to it (lender approval, full-doc income, etc.) this is the definition of a bail out.  Wholesale debt forgiveness.  The lender has to eat the cramdown or foreclose; but the simple fact is that the government is taking all the folks who borrowed too much, bet big on real estate and racked up mortgage debt and saying “don’t worry about it, we’ve got this one.”

Thanks Uncle Sam, but put down the check and let’s divide this up like grown-ups.  I’ll pay for my mistakes - you pay for yours - and let’s call it a day.

From the New York Times:

The centerpiece of the Senate package is a rescue-refinancing plan aimed at stemming the tide of more than 8,000 new foreclosures a day that lenders are filing across the country. The plan would allow distressed borrowers and their lenders to stem losses by allowing qualified owners to refinance into more affordable, 30-year fixed-rate loans with a federal guarantee.

The legislation would also provide benefits for first-time buyers, who would receive a refundable tax credit of up to $8,000, or 10 percent of the value of a home, on purchases of unoccupied housing.

As part of a regulatory overhaul of Fannie Mae and Freddie Mac, the mortgage finance giants, the bill would permanently increase to $625,000, from $417,000, the limit on loans they can purchase from lenders in expensive housing markets, making it easier for borrowers to obtain mortgages at discounted rates. Despite a presidential veto threat, the package received overwhelming bipartisan support, clearing by 83 to 9 a crucial procedural vote in the Senate on Tuesday morning.

Final passage of the bill was snagged temporarily in the Senate Tuesday evening because of a fight over renewable energy tax credits. Still, major supporters of the bill said they hoped it would be completed before for the holiday.

“There’s a great desire to act,” said Representative Barney Frank, Democrat of Massachusetts, the bill’s main author in the House. “We’re just not there yet.”

The bill would provide $150 million to expand counseling for borrowers to prevent foreclosure and would establish stricter disclosure rules to require lenders to make plain the maximum monthly payment for a borrower with an adjustable rate loan.

The bill also establishes an Affordable Housing Trust Fund, to be financed by $500 million to $900 million in fees from Fannie Mae and Freddie Mac. The fund will cover any expenses related to the foreclosure rescue plan for three years, and will be used to create affordable rental housing.

Under the refinancing plan, only borrowers seeking to remain in their primary home would be eligible. Lenders would first have to agree to cut the principal balance of loans to roughly 85 percent of each property’s current value.

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Home builders continue to dial back the production of new homes, with new housing starts reaching a 17-year low in May.  Further, the data points to future declines in starts as the market continues to correct.

From Calculated Risk:

Building permits decreased:

Privately-owned housing units authorized by building permits in May were at a seasonally adjusted annual rate of 969,000.
This is 1.3 percent below the revised April rate of 982,000 and is 36.3 percent below the revised May 2007 estimate
of 1,522,000.

Single-family authorizations in May were at a rate of 623,000; this is 4.0 percent below the April figure of 649,000.

The declines in permits suggest further declines in starts next month.

On housing starts:

Privately-owned housing starts in May were at a seasonally adjusted annual rate of 975,000. This is 3.3 percent below the
revised April estimate of 1,008,000 and is 32.1 percent below the revised May 2007 rate of 1,436,000.

Single-family housing starts in May were at a rate of 674,000; this is 1.0 percent (±9.9%)* below the April figure of 681,000.

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Housing starts fall to 17-year low

Homes in foreclosure and homes entering the foreclosure process are up to levels not seen since 1979 reported the MBA today.  For those that say we’re coming to the bottom, I say either you’re full of it or we’re picking up speed for a nasty crash landing in to the bottom - either way it ain’t go to be pretty.  Oh, and the total percentage of mortgages in some form of delinquency (excluding foreclosure) is also at it’s highest point since 1979 - so it doesn’t look like making your mortgage payment has gotten any easier, no matter who you are.

From Market Watch:

he percentage of loans in the foreclosure process at the end of the first quarter rose to 2.47% of all mortgages outstanding on one- to four-unit properties, up from 2.04% in the fourth quarter, according to the Mortgage Bankers Association’s National Delinquency Survey, released on Thursday. Loans entering the foreclosure process in the first quarter rose to a seasonally adjusted 0.99%, up from 0.83% in the fourth quarter. Both the rate of foreclosure starts and the percent of loans in the foreclosure process were the highest recorded since 1979, according to the group. The seasonally adjusted delinquency rate for mortgage loans also was the highest since 1979, with 6.35% of all loans at least one payment past due during the first quarter, up from 5.82% in the fourth quarter.

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Foreclosure rate rises to highest since 1979

Hat tip to the Data Mining blog for posting this gem of a graph of foreclosures from the New York Times. Check out the visual representation of foreclosures below. Stunning. Click the link above to see the full-size image.

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Foreclosure Eye Candy

Is the California city an outlier or the canary in the coal mine?  Vallejo, California filed for bankruptcy today as the first city put underwater by the foreclosure and housing crisis. With property values declining and folks lined up for reassesment of property taxes local governments who have lived like kings on bloated real estate tax revenues are going to see lots of red ink in the near future.  Will Vallejo be the only or the first?  I imagine that they’ll only be the first, with cities outside of 25 miles from the coast being the suspects to keep an eye on.

From the San Jose Mercury News on the Vallejo bankruptcy:

The city of Vallejo filed for bankruptcy protection Friday to deal with a ballooning budget deficit caused by soaring employee costs and declining tax revenue.The San Francisco Bay area suburb of about 120,000 residents became the largest California city to declare bankruptcy, which will protect the city from its creditors while it develops a plan to return to fiscal health.

Mayor Osby Davis said the city’s attorneys filed papers seeking Chapter 9 bankruptcy protection in federal court in Sacramento.

The foreclosure crisis and economic downturn have caused a sharp decline in revenue from sales tax, property tax and development fees.

Many officials and residents blame Vallejo’s chronic financial problems on labor contracts that they say provide overly generous pay and benefits to the city’s police officers and firefighters, which make up about three-quarters of the city’s general fund.

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City of Vallejo files for bankruptcy

Does Lawrence Yun, the NAR chief economist, have a clue? He might just yet. Yun called the new report on the glut of unsold homes ‘uncomfortably high’ in a resignation that the housing market just isn’t in very good shape no matter which way you cut it.

His comment was in response to the finding that unsold home inventory has risen to a 23-year high even as home prices have declined across the country. The inventory now represents nearly a year’s worth of single-family homes on the market.

More on the unsold home inventory on the market:

The inventory of unsold homes jumped 10.5% to 4.55 million, an “uncomfortably high” level, said Lawrence Yun, chief economist for the real estate trade group.

Inventories represented an 11.2 month supply at the April sales pace, the highest since the records began in 1999.

The inventory figures are not seasonally adjusted. Typically, inventories rise about 7% in April, as the spring and summer sales season kicks into high gear.

For single-family homes alone, the inventory rose to 10.7 months’ supply, the highest since 1985. For condos, the inventory of 14.2 months is the highest ever.

Sales of single-family homes fell 0.5% in April to a 4.34 million annual pace, down 16% in the past year and 32% from the peak. Condo sales dropped 5.2% in April to a 550,000 annual pace.

Several markets that have seen price declines of 20% or so are turning around, Yun said, pointing to San Diego, Detroit and Fort Myers, Fla.

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I just found out about PolicyMap a new service that lets you map an insane amount of data by region on all subjects ranging from mortgage originations, neighborhood crime stats and income demographics (and tons more).  This could become a killer tool for homeowners looking to buy a home and for real estate agents and mortgage originators to use for everything from farming to advising clients.  It can also be used by lenders to make risk assesments on properties and more.

Since I’m a tech geek at heart this site really appeals to me and could become a useful tool for you.  It’s also an interesting toy to play around with to learn a bit about your neighborhood.

I pulled the below graph for Walnut Creek, CA that shows the percent of all purchase loans in the area that were made with subprime piggyback second financing.  This data is pulled from lender’s HMDA reporting and broken down by census tract.

Let’s not overlook the scary fact that in 2006 more than 55% of all subprime purchase loans in the purple areas had piggyback 2nds.  Of course this means that half of the subprime home purchases in these areas were made with zero down payment.

Here’s the legend:

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PolicyMap - Killer tool for real estate

While poor Mr. Bailey can’t get a break with his loan modification efforts with Countrywide a higher-profile figure, California Congresswoman, Democrat Laura Richardson was able to negotiate a loan modification to save her home from foreclosure after joining the House of Representatives.

With our own Congresspeople going in to foreclosure after buying 100% financed housing at the top of the bubble do we really have any chance of avoiding a massive government housing bailout?  Can we demand fiscal responsibility from our representatives?  Is it too much to ask?  Is it even fair to levy that question?  Ms. Richardson says she didn’t recuse herself from the housing bailout package votes in the House, instead  she missed them due to personal reasons, but it would have been prudent of her to do so.

Initial reports stated that her home had gone in to foreclosure, but Representative Richardson stated that the home was never in foreclosure and that she has instead negotiated a loan modification to save her home.

The home, bought in 2005 with 100% financing had a Notice of Trustee Sale was filed for the Sacramento home by the lien-holder, Washington Mutual.

From the article in the LA Land blog:

California Rep. Laura Richardson today denied a published report that her $535,000 Sacramento home had slipped into foreclosure, saying she had renegotiated her loan to keep the home.

The house “… is not in foreclosure and has NOT been seized by the bank,” Richardson, a Democrat from Long Beach, said in a statement. “I have worked with my lender to complete a loan modification and have renegotiated the terms of the agreement — with no special provisions.”

Representative Richardson’s statement in response to the reports:

CONGRESSWOMAN LAURA RICHARDSON

For Immediate Release

May 21, 2008

The story published in the Capitol Weekly regarding residential property that I own in Sacramento requires clarification.

Within a 12-month period last year (2007-2008), I was a member of Long Beach City Council, the District Director for California Lt. Gov. Cruz Bustamante, a member of the California State Legislature, and, now a member of Congress. While the transitioning has impacted me personally, the residential property in Sacramento California is not in foreclosure and hasNOTbeen seized by the bank.

I have worked with my lender to complete a loan modification and have renegotiated the terms of the agreement — with no special provisions. I fully intend to fulfill all financial obligations of this property.

On two housing bills that were cited by the Capitol Weekly, the allegation is that I recused myself from these votes. I did not. I was absent from Washington, D.C., and my duties in the House of Representatives due to the untimely death of my father and his subsequent funeral in California.

I understand that these homeownership issues are a reflection of what many Americans are going through as they fight to keep their homes and to remain financially stable.

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Congresswoman Staves Off Foreclosure with a Loan Modification

When does a ‘rescue’ become a ‘bailout’?  I think we’re about to find out.

From Market Watch on the Congressional Housing Rescue bill:

A key House Democrat said that it is now almost certain that Congress will be able to craft a significant housing rescue package after Senate Republicans and Democrats were able to reach a bipartisan compromise. “[I]t is highly likely we will be able to compromise on a significant housing package,” Frank said in a statement after the Senate Banking panel approved the Senate version of the bill. “There are of course some differences between the two bills and we will need to work on these differences, but I look forward to continued cooperation between members of the House and Senate to achieve a mutually agreed housing package sometime next month,” Frank said.

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Housing Bailout Bill Likely

The Senate Banking Committee reached a consensus on new legislation designed to help homeowners, forestall foreclosures and create more affordable housing in a government-led bail out attempt to save the housing market from imploding on itself.  The ranking Republican on the committee Richard Shelby said he’s comfortable that the bill protects American taxpayers from covering for bad bets made by speculators.

From Housing Wire:

Primary Republican opposition to the proposal stemmed from perceived taxpayer funding of the proposed FHA expansion, our sources suggested; restructuring the expansion bill to push the costs more directly onto the GSEs, as numerous media outlets have reported over the weekend, may solve some of those concerns.

The President is in favor of providing assistance to distressed homeowners as long as the bill doesn’t reward financial risk-takers who gamed the system for financial gain. 

From Housing Wire:

“Our policy in this administration is [that] laws shouldn’t bail out lenders, laws shouldn’t help speculators, the government ought to be helping creditworthy people stay in their homes,” he said in remarks delivered at a White House press conference Monday afternoon.

From Market Watch on the banking committee’s approval of the new bill:

The top members of the Senate Banking Committee reached agreement Monday on legislation intended to help the ailing housing market and impose tougher rules on mortgage-finance giants Fannie Mae and Freddie Mac.

The committee is scheduled to vote on the bill on Tuesday morning. It aims to prevent more foreclosures and create more affordable housing, and it would result in a new regulator overseeing both Fannie and Freddie.

Faced with the struggling housing market, senators have been negotiating for weeks over the form of a new bill. The House has passed a similar version, which would allow the Federal Housing Administration to insure up to $300 billion in refinanced mortgages.

The Senate’s bill “addresses the root of our current economic problems — the foreclosure crisis — by creating a voluntary initiative at no estimated cost to taxpayers which will help Americans keep their homes,” said committee Chairman Christopher Dodd, D-Conn.

The panel’s top Republican, Richard Shelby of Alabama, said he’s satisfied the bill protects the U.S. taxpayer.

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Senate Banking Committee Reaches Consensus on Bailout Bill

Back as the credit crunch was picking up steam wholesale account reps would parade in to our offices touting the saving grace of our brokerage - reverse mortgages. As a FHA-approved lender we were eligible to write reverse mortgages for seniors who had lots of equity, little cash, and no other assets to live off of (for the most part). These wholesale reps were excited because their banks had just opened up a new wave of products called “jumbo reverse mortgages” which went far beyond the lending limits of the FHA-insured Home Equity Conversion Mortgage (HECM) for high-value areas such as California.

The siren call was the same - these loans were expensive and property-owners strapped for cash had little opportunity to extract equity in any other way. The jumbo reverse mortgages were the best solution and represented a hefty payday in times that were clearly becoming more lean and more mean as the credit crunch got into high gear. Jumbo reverse mortgages allowed homeowners who lived in expensive homes to tap large amounts of equity to support their retirement by either pulling out a lump sum of cash, taking a monthly stipend or opening up a line of credit. Without a monthly payment these loans are attractive to retirees looking for additional income.

Jumbo Reverse Mortgages Disappear Rather Quietly

But as the credit crunch has accelerated and the market for residential loan products dried up reverse mortgages became less attractive to investors. With property values declining and inflation increasing the risk profile of a “jumbo” reverse mortgage became too severe for banks. Specialists in reverse mortgages such as Financial Freedom quietly pulled the plug on their jumbo reverse mortgages back in March to little fanfare at the time. More recently Bank of America, UBS and Credit Suisse did the same.

The elimination of these products makes complete sense from a lender’s perspective. With housing prices dropping like a rock in water in the most highly-priced areas (such as California) the jumbo reverse mortgage were no longer a good bet. Lenders were more likely to end up with an undervalued asset at the maturation of the loan.

Unfortunately it has crippled retirees who were banking on home equity to make it through retirement.

Seniors banking on their house find themselves stuck

Seniors in California and other high-value areas who held on to their home as their primary retirement vehicle have been completely upended by the declining housing market, tightening underwriting guidelines and the elimination of jumbo reverse mortgage products. Many who were banking on their home and a reverse mortgage loan have found their borrowing capacity with the reverse mortgage to has been filleted - and those looking for the biggest loans are staring at the prospect of a very small reverse mortgage with very little cash as a result.

To add insult to injury retired seniors have seen traditional financing options dry up as loan availability to retired persons has reverted to fully-documented income loans which with large property and loan amounts in California are unrealistic, nay unattainable, financing options. Further, in this market they may be unable to sell their home for anywhere near the value it held just a few short months ago completely eliminating all access to equity in their home.

Seniors are Victims Here?

It’s hard to say that seniors who put all of their eggs in one basket are the victims in this case. Just as one who owns all their stock in one company - these seniors either bet wrong or didn’t pay attention to the fact that they weren’t diversified. It does pain me though to see seniors who are house poor not able to convert asset they are sitting on in to capital in any way, shape or form.

An instructive lesson?

The inability of seniors to obtain these jumbo reverse mortgages does go to show that equity in your home is not anything you really ever own. It is simply a measure of the current market and nothing more. Products are ephemeral, guidelines and value too. It will be interesting to track what happens to these seniors suddenly shut out from their retirement capital. These years suddenly don’t look so golden.

Excerpted from:

Reader Paul (big hat tip to him) pulled a key comment out of the B of A press release issued earlier this week that addressed Bank of America’s efforts to help homeowners keep their home. The comment, burried at the bottom of the release was:

“We will continue to work with distressed borrowers to match the customer’s repayment ability with the appropriate loss mitigation option, including loan modifications, forbearances, repayment plans, lower rates and principal reductions,” McGee said. “

Paul thought it was absurd that no one pressed McGee on the last point which was “principal reductions.” This, he argued correctly, is a massive change in policy for the industry, as banks have been fighting tooth and nail to make sure that court-ordered principal reductions (cram downs) aren’t enforced from the bench.
The Implications of a BofA-led Principal Reduction Effort Would be Staggering

If Bank of America is truly making principal reductions a part of it’s “home-saving” playbook it would have incredibly wide-spread implications across not only the banking industry but the housing market and general economy.

As Paul mentioned, the press didn’t have a chance to grill him on this point and I agree with him that McGee needs to be held accountable for what he said and to outline in greater detail just what role these principal reductions are playing (or will play) in BofA’s loan modification process.

Bank of America, if they are making principal reductions even a trivial part of their options in keeping homeowners put they will set a precedent which will inexorably alter the housing market. Think of the ramifications of this action.

First of all, Bank of America’s adoption of this policy would make it essentially an industry-accepted practice overnight. Lenders of all types would gladly follow their lead in an effort to keep their REO rolls from growing exponentially. Why wouldn’t a lender take a $25,000 principal reduction if it keeps the mortgage current than risk the pain and headache of foreclosing for a property that might only sell for 50% of the current note?

The Ultimate Moral Hazard

Homeowners who are struggling with their payments due to myriad reasons (from fraudulently overstating their income to a resetting option-arm to death of the primary wage earner) will see principal reductions to keep them in their home. The homeowner next door in a comparable home will not see that relief as long as they continue to make their payments on time.

Homeowners are rewarded for feigning problems with their mortgage payments to get the reduction. It’s a less-painful version of mailing in your keys. Go down 60-days on your mortgage and get a nice chunk of your loan balance forgiven.

A Good Homeowner Gamble?

The argument that the mere idea of a damaged credit score is enough to keep full-balance folks paying right along while their neighbors get gifted $50k loses credibility in the current environment. If I’m a homeowner (which I am) and I’m current on my mortgage (yes, again) and I’m seeing all of the bail out plans and changes being made and I see Bank of America add principal reductions to their loan modification tool kit for delinquent borrowers I might start to think that there is going to be some government intervention on future credit as a result of this mess too.

Think about it - with all of the changes to save homeowners who are losing their homes and going down late on their mortgages the government will surely want to address future credit opportunities for those bailed-out. They may even be thinking of a way to help folks who suffered a foreclosure or late payments by a “resetting ARM” be distinguished in credit scoring from those who faced bankruptcy or late payments on consumer debt.

If I’m a homeowner who is seeing principal reduction around them I might trade $50,000 in debt forgiveness for a couple of years of higher interest-rate costs. Heck a back-of-the-envelope calculation might show that it’s worth it even without changes to current credit scoring methods and the laws governing same.

Is Once Enough?

Do you only get one shot at the reduction? Blown Mortgage regular Ann had this to say about the principal reduction path:

The question I have is what types of loans are going to be modified? Teaser ARMS? MTA’s? Also how do you modify? Based on True income when it was a liar loan? Principal Reductions in a declining market..does that mean that a year from now when the price goes down another 10% are those borrowers going to expect more? What about the average Joe next door, who isn’t a “troubled” borrower and now has a principal balance of $300K..while his neighbor had 50K forgiven and now has principal balance of $250K?

Seems to me there is no end in sight…

And that’s another major challenge. What happens to the neighbor who takes the write-down now, and then sees his neighbor take a write-down in six-months that is double the amount forgiven to him? Does that neighbor sue Bank of America for an additional reduction?

Where do Second Mortgages Fit In?

The questions keep going. What about second mortgages? Where do those fit in? Does Bank of America forgive debt on the second first or keep the higher-rate (mostly unsecured) second debt and reduce the principal on the first? How does that get figured out.

What did McGee Mean?

In the end Paul is right - what is Bank of America really considering with these loan modifications and principal reductions as they mentioned in their sweeping press release about homeownership. Did they “misspeak”? Were they only pointing to the options available in the entire universe of home-saving? It’s a question that needs to be drilled down on and Bank of America needs to be held accountable to what they said for the sake of all participants in this market.

What do you think?

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Is Bank of America headed towards principal reductions?