In this case, a change to bankruptcy laws that would allow judges to modify mortgages on primary residences.

Right now it can be done on a vacation home, recreational boat, etc., but not on a primary residence, but Senator Dick Durbin (D-IL) is bringing back a change in bankruptcy law to change this.

According to reports, this will be a priority of Obama, but we are hearing that about a lot of things right now.

This is a very good law for a number of reasons:

• Modifying mortgages is cheaper than foreclosure.
• With mortgages sliced and diced 6 ways from Sunday, it is currently impossible to get consent from the holders of the mortgages to renegotiate the loans.
• It punishes the players who created the bubble.
• The cost to people taking out mortgages is minuscule, on the order of 25-75 basis points (¼-¾%), which should not make a significant difference in home affordability.
• It makes the use of arcane financial instruments on home mortgages less certain, and hence less likely.