patrick.net

If they actually reduce principal to the max of 30% on most or all of the homes it would make a big impact (for the new HAFA program I mean). The declines would stop quickly though I think the market would likely remained depressed for quite some time as jobs and wages are still low or dropping.

FWIW HAMP had a provision to reduce principal too but they almost never implement it and even if they do it seems they only rarely reduce the principal as much as they could.

The banks simply will not or cannot to do large cram downs on the loans. What isn't clear is: is it because they want more money? OR do they know they'll go bankrupt if they do? I suspect the latter but have no proof.