I wonder why only a small fraction have been re-negotiated. Could it be because the holders of that debt are sitting on a pile of newly printed Federal Reserve Notes? Could that be keeping them from dropping the price on this debt? The only way housing will turn around is firesale prices of 'toxic' debt and bankruptcy for the current holders that cant meet their obligations.

If the banks cannot remain solvent without new monetary 'infections' (used on purpose) they should be liquidated. ONLY then, when the new owners of this debt have high margin cash flows they want to protect, will creditors work with the debtors to TRULY provide support.

Bank bailout policies support increased forclosures, higher prices, tighter credit, and lower purchasing power for consumers.

Everybody seems to want money in the hands of consumers. What they really want is increased purchasing power for them. The only way for that to happen is massive debt liquidation, revaluation and falling prices. All monetary policy is trying to prevent such an occurence.

   We are in the category of homeowners with good credit (until all of this started), steady but recently reduced income (retired) and now with an "upside-down"  mortgage. We began the application process for a mortgage modification with B of A in Dec 08. After much delay and restarts an offer came thru in June for a three month trial period with about a one third reduction in the original monthly payment. If it goes OK the permanent payment would be at about the same level.

   They say the reduction will be arrived at by reducing the interest, streaching the term out to 40 years and possibly by adding a balloon payment at the end to make the principle look smaller. The interest will start to climb back to the original rate after five years and the house is worth less than what is owed. We had hopes that they would reduce the principle to current value of the house.

   It dosen't seem like the bank has very much interest in releasing their bail-out money, they are treating it as though it is their own and won't pass it on.

   The plan will still leave us with an extreemly tight budget which will only get tighter as the interest rate climbs back up.  We used up our reserves and our patience trying to wait out this housing slump and have decided to let the house go back to B of A, to move out and to down-size our living.

   Current articles on the subject indicate that we are not alone. Please add your story who ever you are.

When you buy a car as soon as you drive it off the lot the value decreases, but you keep it and make the payments until you own it or trade... But when you buy a house and the value goes down, even if your going to live there, you're somehow getting screwed...... Does anybody buy a house to live in, or is that concept somehow UnAmerican. You made a deal, somebody loaned you money... Now stand up and hold up your end of the deal... Just because it is a house doesn't change the ethics of keeping your word.

Treasury yields will be coming down over the next few months as the financial and real estate stocks come down. Check out my post from early June which told people to sell TBT, now I am long TLT and expect the 30 year bond to come down. http://goldstocktrades.wordpress.com/2009/07/09/tlt-long-term-treasuries-are-bullish-next-move-to-100/

The difference is...you buy a NEW car expecting it to depreciate a little! Your car investment is most likely NOT going to be hundreds of thousands of dollars!

When you buy a HOME...you are investing in your future and your financial portfolio! You expect the home to appreciate and  become an asset! You most likely ARE investing hundreds of thousands of dollars, expecting an equity return to move up or just to improve what you have! Would you buy a home for say $300,000. when NOW it ONLY appraises/is worth  $130,000.? It would be stupid and ridiculous to continue paying a mortgage on such a large depreciation! I don't think that a car depreciates to the extent that homes have! You obviously DO NOT own a home!  

I'd be bullish on Treasury yields for the next two months too as the Fed finishes its round of QE and Treasury debt purchases. Probably till september as thats when the treasury needs to complete it's fiscal year funding. After that, If the Fed dosn't monetize, rate will go through the roof as people see through the smoke and mirrors.

I work in the residential industry and there is plenty of demand for our services.  The problem is, banks won't lend a dime.  They are sitting on their government handouts and twiddling their thumbs.  I'm not suggesting plenty of homeowners weren't living beyond their means, but the banks won't even finance tiny little remodels.  We have countless jobs on hold that are entirely affordable for the homeowner.  The financial industry is selling out America, folks, plain and simple.  Thank your neighborhood fat cat.

SRS (2x short the IYR Dow Real Estate) is going to be great for awhile!

I own a home and 10 acres it sits on, The Bank loaned us the money and we pay it back.... the more the market value is the higher my property taxes can be... We live here and will stay here until it is over. we didn't buy this land, build a house  to sell it... Mr. Robin we live here !!!!!! I was 67 years old today, but what do I know... Pay your bills you made them....

There never would have been a financial meltdown in the banking industry had the banks used proper lendind standards of the past. Have a least 10 % ass in the home 20% preferable. Of course home ownership levels would be lower than they are today because of having to put that much ass into the home, but the values would have held steady. As for the people who bought home and the value has dropped either send in the keys and take the financial hit or just pay like you are supposed when signed the contract.