
Lenders really need to let go. They blew it. It's over. Just let it die. Both the lender and the borrower pay a price -- or at least they are supposed to. Instead, we bail them out, and we pay the price. Don't forget about us who pay for their mistakes. Part of the price we pay is obvious in the accounting for the various bailouts, but much of the price we pay is hidden in higher home prices, greater public indebtedness, and in the subsidized entitlements of borrowers everywhere. Government backed loan modification attempts are ill-conceived because bailouts create moral hazard. However, the bailouts and the resulting moral hazard can be disguised inside the black box of obfuscation and paperwork of the HAMP program. If the banks and bureaucrats raise…[READ MORE]