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But the nominal value of mortgage debts would remain fixed.
With house prices falling anew, further reducing the value of mortgage assets, how reasonable is that?
Wall Street banks would also be forced to write down the value of mortgage securities they had protected through the guarantors.
These were synthetic bets on the value of mortgage securities with one party taking the long side and the other the short.
A strategy proposed by Jaffee is for Fannie and Freddie to gradually raise the fees they charge for guaranteeing the value of mortgage securities.
BLOOMBERG NEWS Former Credit Suisse Executive Pleads Guilty to Inflating the Value of Mortgage Bonds | Kareem Serageldin, a former senior trader at Credit Suisse, admitted in court on Friday that he fraudulently inflated the value of mortgage bonds as the housing market collapsed.
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Citigroup wrote down $1.3 billion from the deterioration in the value of mortgage-related securities.
Everything fell apart when the value of mortgage-backed securities went to hell.
Europe's biggest bank, UBS, said it had written down $3.4 billion in the value of mortgage-backed securities and would suffer a loss in the quarter.
Critics said the regulations mandated write-downs that failed to reflect the true value of mortgage-linked assets and the prices they might fetch in the future.
The market has been shaken by uncertainty surrounding bond insurers and whether they will be able to handle large losses in the value of mortgage-backed bonds.
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Justyna Jupowicz-Kozak
CEO of Professional Science Editing for Scientists @ prosciediting.com