FDIC Chair Sheila Bair - Destroying Home Value... One Neighborhood at a Time

`` In the prime loan neighborhoods, prices haven’t fallen as far, and people have more equity, so now when the banks conduct their net present value analysis, can you guess what’s going to happen? While in the sub-prime neighborhood, the cost of modification was often less than the cost of foreclosure, in the prime neighborhoods the relatively higher values and greater equity will cause the reverse to be true. Modification will cost more than foreclosure, and the banks will be free to foreclose.''