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The Masked Tulip

Don’T March Against Banks — Walk Away From Them

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If you’re a homeowner thinking of joining these rallies across the country, here’s some free advice.

Don’t march. Walk!

That’s right: walk. As in: …away from the home.

Under U.S. law, many homeowners can get an amazing do-over.

They can walk away from their mortgage, send in the keys, and in most cases the lenders will have to eat the loss.

Heads you win, tails the bank loses.

“Losing” a home in which you have no equity is a meaningless loss. Your thinking is about as upside down as your mortgage.Walk away and rent.

http://www.marketwatch.com/story/dont-march-against-banks-walk-away-from-them-2011-09-30?dist=afterbell

Shame that millions of Brits cannot do the same.

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Agreed TMT, but it is well worth reading the comments to get a better understanding..excerpt below:

The person walking away loses too, they lost their house and all the payments they have made and their down payment.

I have friends in California who 'walked away' a year ago, they purchased at the top of the bubble and lost their lifetime savings (deposit) as a result.

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They can, but they will be pursued.

In the last HPC 1995 ish one of my pub locals did this. When the bank chased him he went to CAB, who told him he should consider bankruptcy. This seemed an easy option to him until they told him it would cost about £500, so he just brushed it all aside. To my knowledge he was never approached again, unfortunately he died at the age of 48, 3 years ago so they have no chance now.

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Agreed TMT, but it is well worth reading the comments to get a better understanding..excerpt below:

The person walking away loses too, they lost their house and all the payments they have made and their down payment.

I have friends in California who 'walked away' a year ago, they purchased at the top of the bubble and lost their lifetime savings (deposit) as a result.

This is the Concorde fallacy - the money was already lost.

If you walk away from $200,000 negative equity, then your financial position improves by $200,000 regardless of how much (e.g. your deposit, loan repayments etc.) you have already lost.

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This is the Concorde fallacy - the money was already lost.

If you walk away from $200,000 negative equity, then your financial position improves by $200,000 regardless of how much (e.g. your deposit, loan repayments etc.) you have already lost.

Try telling that to our friends who lost all of their savings...

Concorde Fallacy:

Name given by evolutionary biologists to a form of suboptimal behaviour found among wasps and policymakers.

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There are other ways to hurt the banks - withdrawing your cash and not depositing it in another (fractional reserve) bank is a good one. They will be forced to liquidate assets* in order to cover the cash short fall, if enough people do it. As these assets may well be impaired, they will likely have to sell them at a discount.

TBH, I wouldn't risk a holding a large deposit in a bank in the current climate either way.

EDIT: * ofc, the central banks may step in here, but hey, they may bail them out for other reasons too atm anyway!

Edited by Traktion

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The bank shareholders in the UK have already taken one hell of a beating.

For example Lloyds shareholders are down 90% from 5 years ago.

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The person walking away loses too, they lost their house and all the payments they have made and their down payment.

This is so wrong-headed. There is this preoccupation with PAYMENTS, but nobody thinks for a second about CAPITAL LOSSES.

You are a bond holder. Any half savvy bond trader will tell you that it is the capital losses will kill you. If you are , or are about to, suffer capital losses a good trader will cut his losses. ie get out of the trade. Sell. In this environment, rates cannot go lower. The risk is to the upside, and in fixed income , that means the price will come down. It is really a no brainer. Renting in this climate is not wasted payments, it is saved capital losses !

Remember, if you have a mortgage and are suffering capital losses, you are losing with LEVERAGE.

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So these people 'win' by putting the big banks into further debt which then needs to be bailed out by the taxpayer IE them.

They aren't really winning , just delaying the inevitable payment.

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Try telling that to our friends who lost all of their savings...

But have they lost all their savings?......their savings are tied up in a home they are illiquid, a home they are making use of, a home they agreed a price on that they agreed was of value and affordable...they keep making the payments, what have they lost? If they were not paying mortgage they would be paying rent....what is the problem?

If they had put their savings in stocks and shares and they went down they would have lost their savings...if they had spent their savings on something they no longer had they would have lost their savings.

A home and the savings attached to it is dead money whilst living and paying for it.....the only time you can release the money is when you cash it in.

ps: In the recent past, huge amounts of money was taken from a dubious equity to buy other things.....that is a gamble, a risk that does not always work out to the punters advantage...so best to play it safe than sorry. ;)

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So these people 'win' by putting the big banks into further debt which then needs to be bailed out by the taxpayer IE them.

They aren't really winning , just delaying the inevitable payment.

They can't be bailed out forever. Sooner or later, they have to be left to fail. If not, they will take the state with it (maybe not a bad thing!).

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So these people 'win' by putting the big banks into further debt which then needs to be bailed out by the taxpayer IE them.

They aren't really winning , just delaying the inevitable payment.

What is a 'taxpayer'? they are not taxpayers if they can't pay.....this is why the whole fiasco of debt, credit, wealth and worth is a fairy story....a system that ticks over until it fails completely...implodes in on itself.....take each day as it comes, cause anything can happen. ;)

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  • 338 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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