ms. goodman. the senior director of securities llp. >> mr. chairman and members of the committee i maundered to testify today. my name is lori goodman senior managing director at amherst securities, leading broker-dealer specializing in the trading of residential mortgage backed securities. i am in charge of strategy and business development. to keep abreast of trends in the residential mortgage backed securities market we do an extensive amount of data intensive research. i will share some of our results with you today. as a result of my testimony, i hope to leave you with two points. first, the housing market is fundamentally in very bad shape. the largest single problem is negative equity. second, the current modification program does not address negative equity and is therefore dustin to fail. and there is no single solution the arsenal measures must include principal reduction and must explicitly address the lost allocation between first and investors and secondly and investors. in order to place today's topic in this context let's look a

ms. goodman. we recognize mr.marks, corporation of america you have five minutes. >> thank you very much. it is very good to be here. my name is bruce marks, ceo and founder of naca, neighborhood assistance corporation of america. we have an interest in pan also want to respond to legally binding agreement with every major servicer and the two major investors in the country to do foreclosure prevention. so we have be of a custody, saxon, fannie mae, legally binding agreements, with him, p.m. ac, freddie mac, one west, chase, wells fargo, we've got american homes, hsbc -- again, every one of the major servicers of the country and every one of the major investors in the country we have a legally binding agreement. there's only two real solutions out there. one is to restructure the mortgage for someone with a stable income to make a mortgage affordable, not to refinance, to restructure by permanently reducing the interest rate or the outstanding principal and make it affordable. and i say permanent. that means not a

ms. goodman. the senior director of securities llp. >> mr. name is lori goodman senior managing director at amherst securities, leading broker-dealer specializing in the trading of residential mortgage backed securities. i am in charge of strategy and business development. to keep abreast of trends in the residential mortgage backed securities market we do an extensive amount of data intensive research. i will share some of our results with you today. as a result of my testimony, i hope to leave you with two points. first, the housing market is fundamentally in very bad shape. the largest single problem is negative equity. second, the current modification program does not address negative equity and is therefore dustin to fail. and there is no single solution the arsenal measures must include principal reduction and must explicitly address the lost allocation between first and investors and secondly and investors. in order to place today's topic in this context let's look at the housing market. the mortgage bankers delinquency survey for q3 sh

ms. goodman? >> i want to second what julia gordon said. the conflict of interest between the borrower and the second lien holder is huge in terms of writing down rentable. and in order before you can have a successful principal reduction program, you have to explicitly address the second lien. and there's no other option other than extinguishment. you may want to pay the bank to distinguish the second lien. you may want to let them take a loss over a period of time, but that simply has to be done. another problem that is often come up in terms of installed reduction is the moral hazard or strategic default problem. how do you keep borrowers who otherwise could afford to pay their mortgage from strategically defaulting or trying to take advantage of the principal reduction plan? and there's no single option here, but we have to think outside the box as you mentioned. yet you think in terms of shared appreciation features reducing all principal mortgages to be made with recourse. introducing an impact on credit scores, limiting future access