January 23, 2009
BusinessWeek quoted Professor Richard Green about possible "cramdowns," whereby the government forces lenders to modify the terms of home loans. A year ago, allowing loan modifications would have raised objections, since it would let many homeowners to escape their contractual obligations, the story stated. But the urgency of the real estate crisis has changed many people's thinking, while others "have made the judgment that the moral hazard ship sailed a long time ago," Green said. "Things have reached such crisis proportions, we have to put such niceties aside and get ourselves through this," he added. Green said that the only cure is a mass-modification program, which is what the government used in the Great Depression.
BusinessWeek quoted Professor Richard Green about possible "cramdowns," whereby the government forces lenders to modify the terms of home loans. A year ago, allowing loan modifications would have raised objections, since it would let many homeowners to escape their contractual obligations, the story stated. But the urgency of the real estate crisis has changed many people's thinking, while others "have made the judgment that the moral hazard ship sailed a long time ago," Green said. "Things have reached such crisis proportions, we have to put such niceties aside and get ourselves through this," he added. Green said that the only cure is a mass-modification program, which is what the government used in the Great Depression.