FDIC Considers Principal Writedowns for Failed Banks’ Loans
December 11th, 2009 Categories: Real Estate News
DSNews reports:
Lenders that step in to pick up the pieces of FDIC-insured institutions that go under may soon be required to write down the principal balances on the mortgages they acquire.
This sure makes sense! Think about it, if the new bank taking over a failed institution can write down the note and immediately start receiving income… payments based on today’s value… as long as the homeowner is able to make them – the new bank would save a ton of money on closing costs, inventory holding costs (insurance, market loss, vandalism etc) why weren’t they doing that all along? they already got the assets for pennies on the dollar with guarantees from the Government on any loss!
But as reported, according to Bloomberg News, FDIC Chairman Shelia Bair is considering amending the agency’s loss-share agreements to include language that would allow the outstanding mortgage principal to be reduced for homeowners who’ve been hit by falling home prices and are underwater.
That seems so obvious!– why hasn’t that part of the deal anyway!?!
