Another big problem is that many lenders, whose participation in the program is voluntary, have been reluctant to aggressively rework bad loans. Reducing a loan’s principal balance — rather than lowering interest levels or extending payout periods — is often the best chance of keeping underwater borrowers in their homes.The entire article is predicated on the assumption that, somehow, borrowers were prey for lenders. Any reasoning individual could see the situation for what it really was--those who couldn't afford to own homes taking advantage of the opportunity to live in them for a short amount of time. The number of homeowners skyrocketed in the past decade, as the figure below shows, and now appears to be falling back to historical levels (click here to enlarge). For some reason lost upon us, the New York Times article suggests that the government intervene to maintain apparently unsustainably high levels of homeownership.
Lenders suffered after housing prices fell, not ineligible homeowners who entered their contracts just as they will leave them (with nothing). It is unclear to Corrections why taxpayers should fund those who have already have enjoyed stays in homes well beyond their means--it would seem that for nearly a decade already they have gotten more than they paid for.