Loan Modification

One perspective says that most of the housing boom was a colossal market mistake: an unfortunate consequence of easy money, lax regulator oversight, subsidies to home ownership and irrationally exuberant buyers. In this view, public policy would ideally have pushed back, and housing construction would not have boomed anywhere close to the way it did. Let?s call this the ?bubble theory.?

The opposing view says that there were good supply and demand reasons to significantly increase the amount of housing above previous trends. With the advantage of hindsight, we might have preferred to have stretched out the 2000-2006 construction activity over a longer period, or to have put some of the new houses in different locations. Still, much of the housing built in the 2000s will ultimately prove desirable. Let?s call this the ?fundamentals theory.?