Principal Reductions for 11 million homeowners : Amherst

This idea is being presented by some industry insiders as way to reduce the number of foreclosures.  However, if a done throught Fannie Mae and Freddie Mac then you are putting the bill tax prayers if the home owner re-forecloses.

Analysts in the firm's MBS Strategy Group said principal reductions that "re-equify the borrower" could help raise the rate of mortgage modifications and limit the number of foreclosures.

This will probably get some push with the recent troubles with the "papper mill" issues.  Also there are more defaults coming.

Amherst suggests possibly reclassifying these mortgages as "dirty current." Many of the modified loans are failing and returning to the 30+ bucket, which remains large despite modest improvements in the reported percentage of non-performing bucket, according to analysts. And "most of those loans can be expected to eventually liquidate

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