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No Recourse Mortgages And Us Double Dip

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Reading about strategic default in the US property market, where householders walk away from the house, sending the keys back, owing nothing, it may be that no-recourse mortgages are what have really produced the property double dip in the US, whereas here, if we walk away, the banks will still pursue us for the money owed - and so the best option is to stay put. Will this prevent a real HPC here?

let me add, I think no-recourse mortgages should be available in the UK, and it should be illegal to extend any mortgage that is not no-recourse, because of the "moral hazard" whereby the bank lends money, but refuses to take any responsibility for its lending policies. Logically, the banks ought to be on the line for their lending decisions. The idea that they can lend willy nilly and never or seldom face up to the consequences of their decisions is just wrong. So, rather than tell the banks they can't lend 100% mortgages - I would say to them "you can - do what you think best - BUT there will be no more bailouts, and if the house you lend on is not worth the money, the householder will walk away, leaving you with an asset (the house) that you had previously assessed as being worth the amount loaned - if you can't work out property values, your banks are going to the wall - you do the maths!"

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  • 312 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?

      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%

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