Friday, January 1, 2010
Can’t pay / Won’t Pay… same difference
Why bother? That's the question more underwater Americans are asking themselves about their mortgage. Trapped in the abyss of negative equity, more will decide to quit paying. As they should Lenders do what they can to keep the disease of economic rationality from spreading. They try to "extend and pretend" with lower interest rates, extended terms, and the pretence that eventually the borrower will make good. Anything, really, to avoid the hit to capital that comes from a writedown of the principal.