Tuesday, June 1, 2010

No Shame… Don’t Worry – Someone else will bail you out.

Owners Stop Paying Mortgages, and Stop Fretting

One reason the house is worth so much less than the debt is because of the real estate crash. But the couple also refinanced at the height of the market, taking out cash to buy a truck they used as a contest prize for their hired animal trappers. “I stopped paying in August 2008,” said Mr. Tsiogas, who is in foreclosure on his house and two rental properties. “I told the lady at the bank, ‘I can’t afford $2,500. I can only afford $1,300.’ ”

Posted by bendecko @ 09:52 AM (772 views)
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One thought on “No Shame… Don’t Worry – Someone else will bail you out.

  • If the bank forecloses on these properties then:

    a) They pay the costs of eviction.
    b) The place gets gutted for the copper etc.
    c) They will only get a fraction of the outstanding debt recovered (even if b doesn’t happen).
    d) The evicted owners are not liable for the negative equity (as would happen here).
    e) They would have put the write down into their accounts to show the negative equity that is currently hidden.

    So rather than admit that the lender is actually bankrupt they pretend it isn’t happening.

    Of course it couldn’t happen here. Actually, I think, the commercial sector here is closer to this scenario than the residential sector.

    Well, so far anyway, but given higher interest rates and a lack of lendable funds after, say, a commercial property crash then anything is possible.

    But, of course, it couldn’t happen here


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