Treasury Official Says Administration is Working on Principal Reduction Plan

Yesterday Bank of America announced they "will make principal forgiveness– ahead of an interest rate reduction – the initial consideration toward modifying certain subprime, Pay-Option and prime two-year hybrid mortgages qualifying for its National Homeownership Retention Program (NHRP)."

We hinted that this is the first step in the right direction toward a recovery in the housing market. Today this news hit wires:

WASHINGTON, March 25 (Reuters) - The Obama administration is actively working on a plan to help both jobless workers and those who owe more than their homes are worth and details of the plan are coming "very very soon," a top Treasury official said on Thursday.

"We have come up with some interesting ideas ... to enable some additional people to participate in this program, who may be unemployed or who need principal reductions and we look forward to speaking with you very very soon about these ideas," Herb Allison, Treasury assistant secretary for financial stability, told lawmakers on the House Oversight and Government Reform Committee.
 
This is another step in the right direction....