Principal Reduction in Mortgages

Foreclosures are being filed left and right and are killing the country. The “robo-signing” issue is still being discussed and no one can seem to find a good way of making sense of it all and settling things down. Everyone has thoughts on how to help correct it, but no one has come up with a good answer yet. While we all keep thinking, it seems that we can’t think fast enough.


A group of attorneys decided to confide in one of their friends from Iowa, Attorney General Tom Miller. What these state attorneys asked for was nothing more than to review in fairness what could be done to tone down the foreclosure issues by reducing the principal on these loans. Could principal be reduced enough so that families won’t lose their homes?

The focus initially isn’t on the process itself, but on principal reduction. If the principal reduction actually makes a difference than they should do it, but if we are only getting the principal reduced and still foreclosing on these families what is the real benefit? The primary argument is that if the modifications aren’t done, then we will continue to see the prices of homes go down and have too many homes with negative equity in them. The other dilemma is that you have a group of people that believe that by doing this, that those who haven’t paid are getting rewarded.

I don’t know I would call it a reward, but there plenty of reasons why modifications are good. I would say that the good outweighs the bad, and we just have to look at the situation for what it is. Everyone was greedy; brokers, lenders, banks and borrowers. However, what we need to do now is admit what we did to screw it all up and move on. Let’s fix what we can, and accept what we cannot change.

-Mayer Dallal