Thursday, June 3, 2010

Blame the Banks!

Owners Stop Paying Mortgages, and Stop Fretting

Read the comments. Homeowners who spent their equity every year by refinancing now complain that it was the banks fault. "We were also duped into believing our properties would continue to increase in value."

Posted by ontheotherhand @ 11:09 AM (1034 views)
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2 thoughts on “Blame the Banks!

  • mark wadsworth says:

    I tend to agree with them.

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  • It sounds odd at first glance, but in my opinion a default is as much the lender’s fault (moral responsibility?) as the borrower’s (and often times, as we see here, the fault lies even more with the government than either of these parties!) – the transaction was agreed by both parties and both parties therefore agreed to take on the risks they did; it’s a free market – if the lender wanted more security they should have tightened their terms (or equivalently been more choosy about the mortgages they acquired from other lenders); if the borrower wanted more security they should have searched for better terms or taken on separate insurance. The fact that the state implicitly back some of the risks on each side as a form of providing a public good (financial system stability(!)) makes default both more likely (by the borrower) and more acceptable (by the lender/holder).

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