Strategic defaulters
I wrote this just few minutes ago, responding to Justice Litle, editorial director of Taipan Publishing whose writing I really like. After I read his latest piece, called Strategic Defaulters Are Barbarians Looting Rome which all of you should read here, I started laughing because this has been the topic of more than a few recent conversations among several people I know for a long time and who, never in their wildest dreams would contemplate a default on their little nests. Never mind a strategic default. The home was the very last thing these people would give up on. Times change and so do the people.
JL,
you are very right here, we are in a basket. The problem, however, is not only with the banks loaning the money first and home owners stop paying second, or as you aptly put it, you screw me, now is my turn. Today the real problem is with the banks laughing at the borrowers' faces when they try to refinance. Many of these strategic defaulters tried hard not to default. Since the home values are down, it is nearly impossible for many to refi - based on current lending guidelines. A few of my friends experienced just that. Yes, they borrowed way in excess of what they should have, but they were pushed by greedy mortgage brokers, bank loan officers and by the stupid peer pressure since everyone around them was doing just that. Money were cheap and plentiful. Now most if not all are underwater. Of course, they should have known better, but since none of them had any clue about mortgage and real estate, except that rates were to stay low indefinitely which almost becoming the fact of life, and the home values were never to go down, they kept on borrowing.
So after going to the bank and learning that their home values are way below the mortgage(s) they owe, and with the property taxes not only staying as high as few years ago but even going up ever so slightly but steadily, people decide to walk away. Not only many are foreclosing, they are declaring Chapter 7 bankruptcy to complete the total wipe out of financial responsibility. Soon we will be facing strategic bankruptcy filers as well. And it will go back to the same two things - pushing by greedy lawyers who would make strategic default/foreclosure a fair game, and by the same peers' pressure who today default and go happily bankrupt just as they used to borrow from their home equities. How is that for spreading the rot around?
Fri Jun 4, 2010 09:06AM | Copyright: www.bad-credit-advisor.com | More in Economy | Comments (0)
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