Ray of Hope

It has been my contention for some time, that much of the disaster predicted by the pundits could and should be avoided by changes in regulations. In many cases this could avoid needless foreclosures where properties that are still performing can stay out of the banks "distressed" list.

It looks as though there may be a move toward this kind of thinking. In an article by Gary Carson gcarson@soldillc.com Gary says:

"First, residential real estate was given the OK to modify loans from U.S. regulators and now its commercial real estate’s turn. Coordinating the effort, the Federal Deposit Insurance Corp., Federal Reserve and Office of Thrift Supervision released the new guidelines for banks, which emphasize that modifying loans in a prudent fashion is often in the best interest of both the bank and the creditworthy commercial borrower."

A performing loan is better than a foreclosure for all involved, even if the ratios are not what the regulators want to see.

The economic climate will improve and the more people that make it to that day, the better. Regulations should not perpetuate disaster, they should help avoid or at least forestall it.