Foreclosures, Forgiveness, and Blacklisting:

No Painkillers or Cure in Sight

March 5, 2008

The US housing and mortgage crisis has mushroomed into a new level of adversity. The Wall Street Journal’s latest coverage of the housing and mortgage crisis covered Federal Reserve Chairman Ben Bernanke’s call to deal with the nation's housing crisis. Bernanke wants lenders to aid struggling homeowners by reducing the amount owed on their mortgage to reduce the chances of foreclosure.

In a separate Wall Street Journal article, some home lenders have restricted or eliminated mortgage lending in sharply declining housing markets (referred to as blacklisting), driving prices and values lower. In some cases, lenders have ruled out entire geographic regions or types of homes, such as Las Vegas or Miami condominiums.

When will this bleeding subside and ultimately come to an end? Is the market near the bottom yet? Are there any upside opportunities? Will the bank, thrift, and mortgage industry’s pain turn into someone else’s gain?

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