Friday, January 1, 2010

Can’t pay / Won’t Pay… same difference

US housing market waits for 'homeborrowers' to walk away from mortgage payments

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.

Posted by devo @ 01:46 AM (1033 views)
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3 thoughts on “Can’t pay / Won’t Pay… same difference

  • tenyearstogetmymoneyback says:

    As discussed yesterday an entirely different situation from the UK
    where some people (with 0.5% or more below BoE base rate mortgages)
    only have to pay their lender more than a trivial amount each month,
    but WOULD have to pay off the full value of the loan if they wanted to move

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  • tenyearstogetmymoneyback says:

    only have to pay their lender a trivial amount each month

    I should proof read my posts better when I do them first thing in the morning.

    Happy New Year to all the Renters on here

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  • The upshot of this is that the UK now represents a very bad credit risk for lenders because the Labour government is shielding property speculators from their bad investments – the incentive is to ‘do nothing’ rather than correct the imbalance.

    I wonder if I can be protected from my losses if I go and place a bet on the dogs this afternoon? This is another reason why we are on course for a lost decade – the government is creating it with such questionable policies.

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