> It does seem like the one's who get stuck with "no chair" when the
> music stops are Creditors. As you say , it's costly to Countrywide,
> Citibank and WAMU. The poor people don't end up much poorer than
> before, and they are not the source of the money made by the
> vultures - since, obviously poor people don't have much money.
> The poor people involved got a few months housing.
Well ... there's lots of downside to this kind of thing even for the defaulter.
- Maybe you didn't _want_ to declare bankrupcy this year?
- Default in many places still leaves you on the hook for things like late fees, etc.
- Transaction costs: you moved, you have to move again
- Maybe you thought you could make it for a while and ran up your credit cards, too?
- Maybe you financed your closing costs (where your broker got paid from) ... and existing debt too? "125% mortgages" weren't uncommon there for a while
- It's certainly a hassle ... dealing with this takes time, and time is, uh, money
- Can you move back to where you came from, or at least at the same level for rent? Has the bubble distorted prices in your neighborhood? Are you now less personally desireable as a renter because your credit rating tanked?
Also, despite the fact that we're talking about "poor people" we aren't talking about destitute people. The Heritage Foundation likes to say that 46% of people in the US below the poverty line own their own house. In some sense a "poor person" is _more_ impacted by losing money on something like this than a non-"poor" person, because each dollar means more to them.
/jordan