While the Administration’s plan provides incentives to those involved in a refinance, modification, short sale or deed in lieu, it has to be clear to the American public that the plan is worth little absent a real motivating factor.

Don’t get me wrong, the Washington think-tank that came up with the plan did a fantastic job structuring a solution to the problem they were given.  But the crux of the plan’s success depends on our elected officials in Washington passing legislation making it possible for a bankruptcy judge to modify a debtor’s loan in a Chapter 13 Bankruptcy.

Without the threat of a cram down ,a bank’s corporate executives have little choice but to do their duty, and make decisions based on what is best for their company.  Until the possibility of a cram down in bankruptcy becomes reality, things are going to need to get a lot worse before banks stop taking government hand outs and start making loan modifications that aren’t just for show.

Make no mistake, things will get better.  If you have any doubt read Chuck Lorre Production’s Vanity Card #248.   It is one of my favorites.

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