Three Columbia University professors recently tackled one of the thorniest problems of the housing debacle: how to increase modifications to soured home loans that have been bundled into mortgage bonds.
Troubled mortgages that back securities in the private market, with customer-service outfits collecting payments, are far likelier to go into foreclosure than those in which the lender keeps the loan, the professors say.
They propose creating financial incentives for loan servicers to modify loans to make them affordable, along with some changes in laws to remove impediments.
The authors are Edward Morrison, a law professor, and Christopher Mayer and Tomasz Piskorski, both business professors.
The authors contend that the plan would prevent nearly 1 million foreclosures over three years.
The full proposal can be reviewed at www4.gsb.columbia.edu/realestate.