>>> "Jordan Hayes"
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?
^^^^ CB: Truly. I see what you mean. Although, with a mortgage, the lender takes the house as security for the debt, and the borrower doesn't owe the money.
^^^
- 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
^^^^^ CB: And these wouldn't be secured by the house ?
^^^
- It's certainly a hassle ... dealing with this takes time, and time is, uh, money
^^^^^ CB: Yes, and life is struggle.
^^^^^^
- 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?
^^^^ CB: Yea, and rents might be going up as the demand goes up with all these people have to move out of foreclosed homes.
^^^^^
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.
^^^^ CB: Yep
There are some people who got sub-prime loans who aren't defautling. So, that's one for point to the credit of the US capitalist housing marketeers.