I’ve suspected this all along but didn’t have the information or the math skills to prove my theory.
Barclays Capital’s latest Securitized Products Weekly includes a six-page research article titled Re-default rates for modified loans that’s probably as dry a read as it sounds. Thankfully, we have Ira Artman to give us the Reader’s Digest version:
Here’s the good part:
“The Administration’s “plan” – such as it is – will only reduce the default rate “to 70-75% from 80-85% pre-modification.”
“In other words, the average cost per averted default exceeds the average size of recently originated loans. How does this make any sense?
Wouldn’t the money and effort be better spent if it were devoted to income tax cuts, tax credits and more broad-based stimulative macro-policies? Isn’t this the sort of national discussion we should be conducting?”
Substantive discussions on issues of importance? Critically thinking through issues instead of just throwing money at our problems?
Nah…it can’t be that easy can it?
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