Q: How is this initiative different?
A: The voluntary balance reduction plan is a radical departure from past initiatives.
Q: Why is that important?
A: In the past, lenders never considered steps such as voluntarily cutting loan balances. But no one foresaw the new wave of failed loans caused by falling values. It is hoped that lenders will conclude that lowering loan balances may be the best way to stem the tide of foreclosures.
Q: Will this new initiative be successful?
A: The question is whether lenders will choose to participate and to what degree. Until employment numbers improve and the economy sees sustainable recovery, loan losses are likely to continue.
John Adams is an author, broadcaster and investor. He answers real estate questions on WGKA (920 AM) every Saturday at noon. For more real estate information or to make a comment, visit www.money99.com.