[lbo-talk] Prescience

Wojtek S wsoko52 at gmail.com
Mon Mar 21 07:29:21 PDT 2011


[WS:] But are not most contracts written in such a way that the homeowner owes the mortgage regardless of his/her equity (if any)? For example, you buy a house for $300k, of which 80% ($240k) is mortgaged. The market flops, you lose your job, the house is foreclosed and sells for $200k. You still owe $40k plus legal costs, penalties and what not.

PS Thanks for the reference, i ordered the book.

Wojtek

On Sun, Mar 20, 2011 at 10:15 PM, Andy <andy274 at gmail.com> wrote:
> So I just finished Eugene Linden's Winds of Change, on how climate
> change effects civilizations past and present.  He doesn't make a
> super-strong case for ancient civilizations -- probably because so far
> there isn't a super-strong case to be made -- and he leans heavily on
> Mike Davis's work on El Nino precipitating famine around the Indian
> Ocean in the late 19th century.  He does make a cogent if brief case
> for how it can complicate our current situation.  Not bad overall.
> But what really surprised me was in his account of the American
> southwest, where regional climate prediction tends to line up moreso
> than most places, forecasting drought:
>
> [quote]
>
> In Southern California, many homeowners have very little equity at
> risk because banks have been willing to finance nearly all the costs
> of buying homes.  Will banks continue to do so if prices start to
> stall, or if insurance companies balk at insuring homes in high-risk
> areas?  And what would happen to the banking system if banks become
> suddenly saddled with a huge increase in non-performing mortgages and
> unsalable properties possessed through foreclosure?  With no cushion
> and no buyers, foreclosures would quickly propagate back up through
> the financial system.  Because mortgages have been sliced and diced
> into so many derivatives, the crisis could quickly become systemic as
> investors fled markets.
>
> [end quote]
>
> The book is copyrighted 2006.
>
> --
> Andy
> ___________________________________
> http://mailman.lbo-talk.org/mailman/listinfo/lbo-talk
>



More information about the lbo-talk mailing list