Nom de Plumber is a Nom de Plume

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Please read this first:  Review of Foreclosure Mistakes Is Set - Wall Street Journal

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This newly codified entitlement, easily allowing borrowers to repay less than full principal, is the foundation for our mortgage credit drought, ensuring it to become secular.   Public policy has inadvertently set the stage for long-term housing depreciation, compounding the pressures of both cyclical recession and generational demography (aged Baby Boomers having to sell their empty nests).

With modification as a requisite step now for standard loan servicing, the senior tranches of would-be non-agency RMBS have been turned into credit PO’s, complementing the credit IO’s which make up the subordinate tranches.  They sum to less than par, in the new regime.  So, the economics of lending par are challenged at outset. 

Thank you.