Iceland has come to the realization that the mortgage crisis was the end result of a giant scam meant to extract wealth from the majority of the population by the banks and investment firms through speculation.
Iceland has decided that a portion of their population that are financially eligible now have their mortgage debt written down to their true value.
This should have been done in 2008 or when it came out that the banks and financiers were gaming the rest of us to make their ill gotten gains.
I advocate every country to do the same to correct the market.
The government and the newly constructed Icelandic banks developed a template to be used in case by case restructuring discussions between borrowers and lenders. The templates facilitated substantial debt write-downs designed to align secured debt with the supporting collateral (i.e bring the loan into line with the value of the house) and align debt service with the ability to repay.
The IMF found that such case by case negotiations safeguard property rights and reduce moral hazard, but they take time. As of January of this year, only 35% of the case by case restructuring applications had been processed. To speed things up, Iceland has introduced a debt forgiveness plan which writes down deeply underwater mortgages to 110% of the households' pledgeable assets.
It noted that only when a comprehensive framework was put in place and a clear expiration date for relief measures announced that debt write-downs finally took off. As of January 2012, 15 to 20% of all Icelandic mortgages have been or are in the process of being written down.
Before you jump into the comments to try and school me on how you see the mortgage crisis as not really a problem and not really a scam please watch this video below. It is explained in such a way even Conservatives will understand.
Now why exactly is the MSM totally ignoring this move by Iceland? I had to find a video in Spanish with subtitles to bring you this news.