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The borrower made a commitment to either continue to pay back the loan on the house or return the collateral to the banks. They're choosing the second option in the contract. It's not he borrower's fault that the bank didn't exercise due diligence and plan correctly for possible changes to the worth of that collateral.
I don't get it, if my car depreciates in value, can I walk away from the loan too???
Of course you can, and you could probably finance a new one at favorable rates if you did it before your credit score tanked. That is how the system works.
Well, yes, you're right, closing the loophole is just more regulation. But when lenders and borrowers are so clearly incapable of self-policing, and their actions can have such widespread negative repercussions, it seems almost inevitable. This continuing mortgage debacle has the capacity to bring the financial system to its knees. We need checks and balances to protect the financial infrastructure, so yes, we're probably moving toward regulation, whether we like it or not.
At some point, people's right to make their own business decisions-- ethical or otherwise--have to be checked, and that point is when their actions are causing harm to others. Mass foreclosures ripple throughout a wide pool, adversely impacting financial institutions, shareholders, the stock market and neighbors whose own home values plummet in response, placing them in financial jeopardy. One person's desire to game the system in the name of economic self-interest should be balanced with the negative effects everybody doing that would have on a globally intertwined financial structure. Shouldn't it?
Ahhhhhhhhh........just another step toward socialist utopia. No risks, everyones interest protected, subsurviance to the general good.............yes, and the suns activity has nothing to do w/ global warming so regulate my fireplace, my car, prevent us from drilling for oil in our own country, make sure i try not to keep too warm/....................whatever the topic, it is the same old argument.....the public good....market is taking care of itself.............government regulation....community development act...and resulting pressures are also responsible for the current crisis...........does anyone truly believe that escalating gov regulation is the answer.........here in New York we are slowly dying from gov regulation.........well protected and increasingly unhappy............more restrictions on producing and keeping less of the fruits of our labor.............The gov regulated/mandated public school system sure has helped the general publics economic understanding...........look what has been produced..............Is not the real question....what is the cost? ....can we afford it?...if not, why are we purchasing it..........What will it be worth? how often does the market decline......can not get more basic then that.............if you do not understand that or just have an inherent expectation that you will be rescued however bad your decision...........then how is it a lender's fault???????????????? many homeowners here would be safe if they did not carry such a huge tax burden..........why not regulate that? But we all know the answer to that question!!!!!!!!!!!!!!!!!! What is the next step? regulating which of the ignorant are informed enough to buy as designated by another massive gov agency. Talk about robbery! $8000/yr for 1800 sq ft 25 yr old rural home with essentially zero services.......thank you New York for you continuing successful effort to reduce this states population............
Last edited by OCNYISHOME; 06-13-2008 at 06:25 AM..
Location: Halfway between Number 4 Privet Drive and Forks, WA
1,516 posts, read 4,591,098 times
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Quote:
The borrower made a commitment to either continue to pay back the loan on the house or return the collateral to the banks. They're choosing the second option in the contract. It's not he borrower's fault that the bank didn't exercise due diligence and plan correctly for possible changes to the worth of that collateral.
Oh yeah... And the bank is jumping from the frying pan into the fire by letting these people BUY A NEW HOUSE knowing full well the borrower is planning to walk from their old one!
How is that EVEN possible?
The borrower made a commitment to either continue to pay back the loan on the house or return the collateral to the banks. They're choosing the second option in the contract. It's not he borrower's fault that the bank didn't exercise due diligence and plan correctly for possible changes to the worth of that collateral.
100% agreed. Additionally, the process of securitization has anonymized the mortgage. Jim Bob who teaches little league didn't and owns the corner bank doesn't own the loan. Some Chinese investor who bought the mortgage backed security does. Why does someone feel a sense of honor to pay back some foreign investor they've never met and will never meet?
It's good to see lenders getting away from 100% financing and requiring some down payment. A seller should have some investment in a home they lose if they decide to walk.
It's good to see lenders getting away from 100% financing and requiring some down payment. A seller should have some investment in a home they lose if they decide to walk.
Yep. Until lenders see borrowers with some skin in the game, this carnage will continue and credit will continue to seize up.
Ahhhhhhhhh........just another step toward socialist utopia. No risks, everyones interest protected, subsurviance to the general good.............yes, and the suns activity has nothing to do w/ global warming so regulate my fireplace, my car, prevent us from drilling for oil in our own country, make sure i try not to keep too warm/....................whatever the topic, it is the same old argument.....the public good....market is taking care of itself.............government regulation....community development act...and resulting pressures are also responsible for the current crisis...........does anyone truly believe that escalating gov regulation is the answer.........here in New York we are slowly dying from gov regulation.........well protected and increasingly unhappy............more restrictions on producing and keeping less of the fruits of our labor.............The gov regulated/mandated public school system sure has helped the general publics economic understanding...........look what has been produced..............Is not the real question....what is the cost? ....can we afford it?...if not, why are we purchasing it..........What will it be worth? how often does the market decline......can not get more basic then that.............if you do not understand that or just have an inherent expectation that you will be rescued however bad your decision...........then how is it a lender's fault???????????????? many homeowners here would be safe if they did not carry such a huge tax burden..........why not regulate that? But we all know the answer to that question!!!!!!!!!!!!!!!!!! What is the next step? regulating which of the ignorant are informed enough to buy as designated by another massive gov agency. Talk about robbery! $8000/yr for 1800 sq ft 25 yr old rural home with essentially zero services.......thank you New York for you continuing successful effort to reduce this states population............
Why would anyone bother to read your post? A teen-agers text message conversation is more readable.
It's business, but it's also ethics to pay what you agreed to. You only lose money if you sell.
What happens if we were able to walk away from every investment we had that showed a little downturn?
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