A Local Govt Fix to the Housing Mess?

[PokerGuy]

How does being underwater negatively impact the homeowner who does not intend to sell? How does it negatively impact their ability to pay their mortgage?

 

[Paratus]

How does being underwater negatively impact the homeowner who does not intend to sell? How does it negatively impact their ability to pay their mortgage?

Good Point!

So if being underwater doesn't affect the homeowner it shouldn't negatively impact the mortgage lender if the homeowner walks away for deed-in-lue of mortgage.

Right?

 

[PokerGuy]

Good Point!

So if being underwater doesn't affect the homeowner it shouldn't negatively impact the mortgage lender if the homeowner walks away for deed-in-lue of mortgage.

Right?

A lender is not interested in being a homeowner, which is why they are lending the money to someone else who is. Clearly, the borrower failing to live up to their obligation to pay the mortgage as agreed has a negative impact on the lender. The lender agreed to provide a loan to the borrower. The lender did not agree to assume the risk of the value of the home declining. That risk is borne by the borrower, just like the borrower reaps the reward of an increase in value on that same property.

Why didn't you answer the questions I posed?

If someone has a home, lives in it and is paying the mortgage, how does being "underwater" impact their ability to pay said mortgage?

 

[Paratus]

A lender is not interested in being a homeowner, which is why they are lending the money to someone else who is. Clearly, the borrower failing to live up to their obligation to pay the mortgage as agreed has a negative impact on the lender. The lender agreed to provide a loan to the borrower. The lender did not agree to assume the risk of the value of the home declining. That risk is borne by the borrower, just like the borrower reaps the reward of an increase in value on that same property.

Why didn't you answer the questions I posed?

If someone has a home, lives in it and is paying the mortgage, how does being "underwater" impact their ability to pay said mortgage?

If they have to move they can't. If they had an ARM that reset and now can't refinance. Maybe lost a job or jobs. Would be my guesses.

Its cool that the Banks didn't agree to the risk that the house would lose value and be on the hook if the homeowner defaults. I just refinanced and don't remember that being in the stack of paperwork I signed. Maybe I missed it.

If only there was a way to figure out whether a borrower was likely to default on a given mortgage amount. But I guess that's not needed since the Banks didn't agree to the risk when they lent the money.


Right?

 

[Phokus]

I see a lot of Mortgage Holders sueing over the eminent domain legality here. Correct me if I am wrong here but eminent domain needs to be for a government project or for increased tax revenue.

Letting tons of houses go into foreclosure will greatly decrease tax revenue so you could make an argument that they are doing it to preserve tax revenue maybe.

 

[monovillage]

Sounds like a great scam for the usual suspects and their cronies to make a shit pot full of money at someone else's expense.

 

[piasabird]

I could see this as an argument to be made. Our country has tried different forms of home financing and also diff forms of socialistic programs to help people. One of the reasons the value of housing goes up is scarcity and speculation. Many people bought more house they could afford betting on an ever-escalating housing market. So in many cases I find it hard to fell sorry for these people.

In some countries the Govt manages the land and builds apartment buildings and sells or rents or gives the apartments to people based on some kind of urban development plan. Due to this the Govt sets the price. Housing prices can cause both harm and good to people. If you erased that from our economy we might lose some freedom and still have a brighter future due to lower housing prices.

 

[piasabird]

Cronies make a lot of mone vs banks make a lot of money.