Jump to content
House Price Crash Forum
Sign in to follow this  
AvidFan

Jingle Mail Threatens To Wipe Out America's Bank Reserves

Recommended Posts

Listen again:

http://www.bbc.co.uk/worldservice/document...ith_money.shtml

With the world's economy now threatened by what some believe is the most dangerous crisis since the depression of the 1930s, Michael Robinson looks at the deepening international financial turmoil.

.../

The presenter visits Stockton, CA. to find houses that are 50% down from their asking prices in 2006 and one house originally selling for $200,000 not even selling at sub $70,000.

Profession Roubini of NYU is interviewed and says that he estimates that if Americans take up their right to walk away from their mortgages and hand back their house keys, the losses in the banking system would be devastating, reaching over a $1 trillion alone and all but wiping out the total US banking reserves of $1.3 trillion.

Edited by AvidFan

Share this post


Link to post
Share on other sites
* to the best of my knowledge this would not be possible in the UK, since we don't have any law that prevents a bank chasing a defaulter for losses incurred.

Just go bankrupt then work abroad. Changing you name slightly would help avoid being traced.

VMR.

Share this post


Link to post
Share on other sites

This was among the top five most emailed stories on the BBC last night - I wonder how many people in the UK read it and thought "I could do that if it got bad enough." *

Makes you wonder how many people are starting to check out the escape routes.

* to the best of my knowledge this would not be possible in the UK, since we don't have any law that prevents a bank chasing a defaulter for losses incurred.

Share this post


Link to post
Share on other sites

I can see it happening in a big way here, too.

Say you and your partner bought a house a couple of years ago for £200k on a 100% mortgage. You've furnished it on credit and maxed out your cards to the tune of say £30k

Now your teaser rate has ended and your monthly payments have nearly doubled. You are in around £40k negative equity and can't remortgage.

You make the realisation that your house won't be worth what you paid for it for maybe 10 years!

This is not an unusual situation for a lot of recent first-time buyers.

So what do you do?

Try to tough it out and hope to God that you both keep your jobs, while putting parenthood on permanant hold and spending most of your joint incomes servicing debt?

All in the vague hope that in ten years time you might be back where you started?

Or...

Move into a rental, post the keys back, go bankrupt, and get a life?

Debt-free in a day!

I know which option I'd choose, and I'm sure that millions of others will agree!

Edited by Mr Yogi

Share this post


Link to post
Share on other sites
Or...

Move into a rental, post the keys back, go bankrupt, and get a life?

Debt-free in a day!

Well the logic is clear, but it's not quite as easy as that, as this gentleman recently discovered - some 11 years later, and the 16k he thought he'd walked out on had doubled to 30k - and the bank said they wanted it now if it was all the same to him.

I don't doubt that people will do it here, but many of them will be in for a nasty surprise in a few years time.

Share this post


Link to post
Share on other sites
I can see it happening in a big way here, too.

Say you and your partner bought a house a couple of years ago for £200k on a 100% mortgage. You've furnished it on credit and maxed out your cards to the tune of say £30k

Now your teaser rate has ended and your monthly payments have nearly doubled. You are in around £40k negative equity and can't remortgage.

You make the realisation that your house won't be worth what you paid for it for maybe 10 years!

This is not an unusual situation for a lot of recent first-time buyers.

So what do you do?

Try to tough it out and hope to God that you both keep your jobs, while putting parenthood on permanant hold and spending most of your joint incomes servicing debt?

All in the vague hope that in ten years time you might be back where you started?

Or...

Move into a rental, post the keys back, go bankrupt, and get a life?

Debt-free in a day!

I know which option I'd choose, and I'm sure that millions of others will agree!

I agree this is what people did before and this is what they will do again. Except isn't only a year before you are clear. I am not suggesting that it wouldnt cause some problems with it but if enough people do it, then it wont be stigmatised.

Also I would have thought that some younger people could just leave the country and get rid of the student loan as well. That sounds so attractive financially that I can't believe there wont be a brain drain.

Share this post


Link to post
Share on other sites

Makes you wonder if any were switched on to the fact that it is a no lose situation.

Not sure about buying in the US but assuming 100% mortgages were available and buying is not as expensive as here in the UK.

A 100% IO mortgage at a heavily discounted teaser rate would probably have been less than renting. Buy a house, 2 years later when teaser rate ends, if prices are up, sell it. If prices are down post the keys back! Easy.

Share this post


Link to post
Share on other sites

think about why that american law is in place after the great depression most ex home owners where deeply in debt due to losses there had to be a way out and the normal banruptcy process would have been too long and costly for the us to process hence the current law, the true rich just cleaned up liek you would not believe... how many hoses would you guys buy with cash if they got to 75% off

Share this post


Link to post
Share on other sites
Well the logic is clear, but it's not quite as easy as that, as this gentleman recently discovered - some 11 years later, and the 16k he thought he'd walked out on had doubled to 30k - and the bank said they wanted it now if it was all the same to him.

I don't doubt that people will do it here, but many of them will be in for a nasty surprise in a few years time.

Bankruptcy kills the debt forever.

The difference this time round is that going bankrupt is a hell of a lot easier. My guess would be that if you can save up a decent deposit then getting a mortgage again in 5 or 6 years time will not be a problem.

And not having to pay old debts means that saving up a deposit is much easier!

Share this post


Link to post
Share on other sites
Just go bankrupt then work abroad. Changing you name slightly would help avoid being traced.

VMR.

If you've gone bankrupt there is no reason to hide from anyone. There's absolutely bugger all they can do other than write the debt off.

Legally...

Share this post


Link to post
Share on other sites
If you've gone bankrupt there is no reason to hide from anyone. There's absolutely bugger all they can do other than write the debt off.

True, but I would have thought it would be difficult go bankrupt if still able to work and service the mortgage, even if you are in severe NEQ.

Better to give up work, go bankrupt then leave to work abroad (collecting your gold stash in the country of choice).

VMR.

Share this post


Link to post
Share on other sites

As far as I was aware, the bankruptcy laws have been relaxed over the past 5-10 years making it easier for defaulters to walk away from their 'responsibilities'.

Jingle mail to make a comeback in the UK? Hell if I was 100K down and facing the prospect of a punishing SVR I would consider it....but I dont own, so there :lol:

ps. just saw Yogi's post.

Edited by DoctorJ

Share this post


Link to post
Share on other sites
Listen again:

http://www.bbc.co.uk/worldservice/document...ith_money.shtml

The presenter visits Stockton, CA. to find houses that are 50% down from their asking prices in 2006 and one house originally selling for $200,000 not even selling at sub $70,000.

Profession Roubini of NYU is interviewed and says that he estimates that if Americans take up their right to walk away from their mortgages and hand back their house keys, the losses in the banking system would be devastating, reaching over a $1 trillion alone and all but wiping out the total US banking reserves of $1.3 trillion.

Classic. "What's that smell? That's the smell of poverty".

Share this post


Link to post
Share on other sites
Makes you wonder if any were switched on to the fact that it is a no lose situation.

Not sure about buying in the US but assuming 100% mortgages were available and buying is not as expensive as here in the UK.

A 100% IO mortgage at a heavily discounted teaser rate would probably have been less than renting. Buy a house, 2 years later when teaser rate ends, if prices are up, sell it. If prices are down post the keys back! Easy.

Yes, it is essentially a free put option

Share this post


Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Loading...
Sign in to follow this  

  • Recently Browsing   0 members

    No registered users viewing this page.

  • 396 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%



×
×
  • Create New...

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.