Look at some of this debt forgiveness.
Some loan servicers under investigation by state and federal officials already are slicing loan balances on a very narrow basis. In 2009 and 2010, Wells Fargo forgave a total of $3.8 billion in principal—or an average of $51,000 per loan—for roughly 73,000 borrowers whose mortgages are owned by the San Francisco bank.
Now the reality.
Officials at Bank of America and Wells Fargo said the two banks are comfortable reducing loan balances for certain borrowers, but oppose broad-based cuts. One reason: Some borrowers could stop making payments to get their debt reduced.
A recent study by Columbia University economists concluded that Countrywide's relative delinquency rate "increased substantially...during the months immediately after the public announcement" of the 2008 settlement.
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