[lbo-talk] Housing crashes; how nasty

[Wojtek Sokolowski]

Daniel D:
> 3.  If I understand it correctly, you guys have much more civilised
default
> arrangements for mortgages.  If I have it right (I might not), the
householder
> has an effective put option[1]  to put their house back to the lender at a
> strike price equal to the outstanding value of the loan; the option to
"hand
> the keys back".  No such option to walk away from the deal exists in the
UK
> system, hence the phrase "negative equity trap", referring to a situation
in
> which you want to move house, perhaps to a cheaper place, but can't
because the
> sale price of your current house won't cover the mortgage.  This became a
> phrase in common usage in the UK in the 90s and can still raise
goose-pimples
> in the electorate.

Are not similar provisions included in most US mortgages nowadays?  That is,
if I default and the house is sold below the value of the mortgage, I still
owe the balance, unless I declare bankruptcy, but even the later option is
being taken away as I write this.  

Wojtek