An example that the more the US govt gets involved in cleaning up the
economic mess, the longer it will last, aka Japan, Fitch is forecasting
that between 65-75% of mortgage loans that are modified will redefault
after 12 mo’s. An example of the damage that can be done to a family by
artificially modifying a loan for one who should be renting and
redefaults in 12 mo’s and thus prolongs the agony and delays the
inevitable, is the money that a family spends each month on a mortgage
during the initial 12 after modification that can be used for renting at
a lower monthly price, with money leftover. It’s not the same as owning
one’s own home but it improves the financial health of the family. The
foreclosure process however painful also more quickly clears markets and
brings out demand. The homeownership rate is now 67.5% versus the
average of 65.3% dating back to ’65 and we need to get back to that
average and not keep artificially propping it up.

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