Academic stupidity: Just write off the mortgage principle

Oh yeah, that’ll work well…(sarcasm). Idiot academics; then why the hell should anyone pay their mortgages at all?

They’re not going to avoid another round of foreclosures, they’re going to make it worse.

Read here:

There’s a growing consensus among economists, investors, academics, and consumer advocates that more “principal reduction” — writing off a portion of a mortgage that exceeds a home’s value in exchange for a higher likelihood of repayment — can help avoid another wave of costly and economy-crushing foreclosures. That’s good for homeowners and lenders, and because millions of underwater mortgages are controlled by the government, it’s also good public policy.

But the country’s two biggest mortgage companies are not convinced, according to Edward DeMarco, acting director of the Federal Housing Finance Agency — which oversees the government-controlled mortgage giants Fannie Mae and Freddie Mac.

“Both [Fannie and Freddie] have been reviewing principal forgiveness alternatives and both have advised me that they do not believe it is in the best interest of the companies to do so,” DeMarco told Congress last week. He added that principal reduction is inconsistent with his mandate to protect taxpayers, who have invested more than $150 billion in the companies since 2008.