Certainly, raising an equivalent amount of tax revenue through means other than increases in marginal tax rates would likely have a smaller negativeincentive effect.
In any case, progress in averting the fiscal cliff will depend on one side acknowledging the need for more tax revenue and the other side acknowledging the negativeincentive effects of higher marginal tax rates.
"If the equity in the house is sufficiently negative, there may be an incentive for the household to engage in a short sale, " says Anthony Sander, a finance professor at Arizona State University.
By restructuring mortgages so that homeowners have 5% equity in their properties rather than negative equity, Ocwen creates an incentive for homeowners to keep up with a more affordable payment schedule on a reduced principal.