Principal reduction plan for struggling homeowners could be part of settlement between lenders and states
Florida homeowners facing foreclosure could see their debt reduced by banks under a proposal being negotiated this week by state attorneys general. In return for cutting loan balances, banks would pay less in penalties for foreclosure and mortgage-related wrongdoing. The principal reduction plan, which is being discussed as part of a settlement agreement between lenders and states, would accompany a second program that would provide funding to states to pay for their own foreclosure-rescue activity.
It's about time somebody took this approach seriously. How can the housing market recover with 25% of the nation's mortgages underwater?