Marcie Geffner

Thank you all very much for your comments -- both for and against my argument, equally appreciated. This academic paper, "Mortgage Market Sensitivity to Bankruptcy Modification," http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1121054#PaperDownload, is on point and may be of interest. Marcie Geffner www.marciegeffner.blogspot.com

P.S. With respect to the comment about investors: Investments by definition involve some degree of risk to get a higher return. Total safety earns a mere pittace on, e.g., a bank savings account. Marcie Geffner, www.marciegeffner.com

Thank you all for your comments. All of your points are quite valid, but overlook a few facts: Mortgages that land in bankruptcy court are a very small percentage of the total mortgages in the country. Modifying those mortgages would not be enough to trigger high interest rates on all other mortgages. Bankruptcy court relief would not be a massive bailout or a taxpayer giveaway. As mentioned in my column, the modifications and the judges' discretion would be very limited. Bankruptcy judges can't just hand out rock-bottom interest rates like treats on Halloween. Rich Leonard, a bankruptcy judge in North Carolina, told a Congressional committee: "The idea that we would (or could) somehow willy-nilly give everyone a 40-year mortgage at 2-percent interest is ludicrous." The issue isn't about cheepo interest rates for greedy undeserving borrowers. It's about giving a second chance to people who have suffered economic hardships and who have extremely onerous loans. Both mercy and justice are righteous. Marcie Geffner, www.marciegeffner.com