Comments on: Over half a million strategic defaulters in 2008 http://blogs.reuters.com/felix-salmon/2009/09/21/over-half-a-million-strategic-defaulters-in-2008/ A slice of lime in the soda Sun, 26 Oct 2014 19:05:02 +0000 hourly 1 http://wordpress.org/?v=4.2.5 By: Frank Fitton http://blogs.reuters.com/felix-salmon/2009/09/21/over-half-a-million-strategic-defaulters-in-2008/comment-page-1/#comment-7104 Thu, 24 Sep 2009 17:39:33 +0000 http://blogs.reuters.com/felix-salmon/2009/09/21/over-half-a-million-strategic-defaulters-in-2008/#comment-7104 This seems to me to be a sign of just on ongoing sociological problem with this country. It seems that we’ve almost gotten too modern. Everything is a business decision and no one has any sense of pride or keeping their word on something.

Selective defaulting is a project that I feel should come with some negative consequences. Its going to have to be done on the banks end though. They need to start trying to pursue these people’s money more rather than just taking back the property. Pursuing it though is costly as well. Its just business decision after business decision. We might as well have computers running this whole affair. I think that if we injected a little more human into all ends of this and all other aspects of the financial spectrum, we’d all be a whole lot better off for it.

Check out my blog on selective defaulting and personal financial irresponsibility at….. http://www.thedebtgazette.com/2009/09/st rategic-defaulters/

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By: John Nagle http://blogs.reuters.com/felix-salmon/2009/09/21/over-half-a-million-strategic-defaulters-in-2008/comment-page-1/#comment-7018 Tue, 22 Sep 2009 16:25:35 +0000 http://blogs.reuters.com/felix-salmon/2009/09/21/over-half-a-million-strategic-defaulters-in-2008/#comment-7018 (Oops, meant “defaulted recourse loans” above.)

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By: John Nagle http://blogs.reuters.com/felix-salmon/2009/09/21/over-half-a-million-strategic-defaulters-in-2008/comment-page-1/#comment-7017 Tue, 22 Sep 2009 16:24:23 +0000 http://blogs.reuters.com/felix-salmon/2009/09/21/over-half-a-million-strategic-defaulters-in-2008/#comment-7017 Lenders aren’t currently going after borrowers who default even on recourse loans. But they do have that option.

What we may see, as the economy picks up, are collection agencies buying up defaulted non-recourse loans at pennies on the dollar and going after recovering “homeowners”.

In California, by the way, only original first mortgages are non-recourse. Second mortgages, refinanced mortgages, and home equity loans are not non-recourse loans.

Sympathy for people “losing their house” is overemphasized. Most of those people never really owned a house. They were effectively renters with an option to buy. They got to live in a nice house for a below-market rent for a few years. They had their fun. Now they can get an apartment.

The people who saved up, put 20% down, and got a fixed-rate mortgage are mostly doing OK.

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By: JC http://blogs.reuters.com/felix-salmon/2009/09/21/over-half-a-million-strategic-defaulters-in-2008/comment-page-1/#comment-7011 Tue, 22 Sep 2009 14:11:36 +0000 http://blogs.reuters.com/felix-salmon/2009/09/21/over-half-a-million-strategic-defaulters-in-2008/#comment-7011 Anyone who can get financing for another home while they prepare to walk away or short sell their current home must be OK financially.

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By: JC http://blogs.reuters.com/felix-salmon/2009/09/21/over-half-a-million-strategic-defaulters-in-2008/comment-page-1/#comment-7009 Tue, 22 Sep 2009 13:57:53 +0000 http://blogs.reuters.com/felix-salmon/2009/09/21/over-half-a-million-strategic-defaulters-in-2008/#comment-7009 Once the financially astute accept that they’ll never get back to breakeven in a forseeable timeframe then jingle mail becomes a no-brainer. Corporations reneg on commercial loans all the time and the banks renegotiate or end up with an empty store. Why are residential defaults considered immoral but commercial defaults aren’t?

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By: Lord http://blogs.reuters.com/felix-salmon/2009/09/21/over-half-a-million-strategic-defaulters-in-2008/comment-page-1/#comment-7002 Mon, 21 Sep 2009 20:51:46 +0000 http://blogs.reuters.com/felix-salmon/2009/09/21/over-half-a-million-strategic-defaulters-in-2008/#comment-7002 That is another difficulty subprime borrowers have, no downpayment for another. Even 20% down is meaningless when prices are down 50%.

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By: Nicholas Weaver http://blogs.reuters.com/felix-salmon/2009/09/21/over-half-a-million-strategic-defaulters-in-2008/comment-page-1/#comment-7001 Mon, 21 Sep 2009 20:32:41 +0000 http://blogs.reuters.com/felix-salmon/2009/09/21/over-half-a-million-strategic-defaulters-in-2008/#comment-7001 Its simple: Ruthless defaults happen when the borrower is
a) underwater
b) Has a clue

You could either datamine to the point where you can detect “yes this guy has a clue” or, better yet, just don’t lend with less than 20% down and don’t lend into grossly obvious bubbles!

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By: nemo http://blogs.reuters.com/felix-salmon/2009/09/21/over-half-a-million-strategic-defaulters-in-2008/comment-page-1/#comment-6987 Mon, 21 Sep 2009 19:32:09 +0000 http://blogs.reuters.com/felix-salmon/2009/09/21/over-half-a-million-strategic-defaulters-in-2008/#comment-6987 “The only real solution to the problem is to ensure borrowers never get in a position of significant negative equity by:
1. Making sure appraisals are tough and accurate, and
2. Forcing borrowers to put significant money down.

“A “no money down” mortgage is a non-recourse state is just plain stupid.”

Exactly right. We need to stop thinking that somehow this generation is facing unique problems that the world has never seen before. There’s a reason sensible lenders have required significant money down since before our grandparents’ generation.

Of course, a sensible lender doesn’t get crazy rich crazy fast by acting sensible during a crazy housing bubble.

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By: nemo http://blogs.reuters.com/felix-salmon/2009/09/21/over-half-a-million-strategic-defaulters-in-2008/comment-page-1/#comment-6986 Mon, 21 Sep 2009 19:22:02 +0000 http://blogs.reuters.com/felix-salmon/2009/09/21/over-half-a-million-strategic-defaulters-in-2008/#comment-6986 There’s a reason data mining has a bad reputation, and it’s not just the questionable morality. There’s the fact that it doesn’t work very well. Most data mining is looking for “meaningful” patterns in a swirl of clouds.

Hamlet: Do you see yonder cloud that’s almost in shape of a camel?
Polonius: By the mass, and ’tis like a camel, indeed.
Hamlet: Methinks it is like a weasel.
Polonius: It is backed like a weasel.
Hamlet: Or like a whale?
Polonius: Very like a whale.

Methinks it is very like a financially literate strategically defaulting jingle-mailer.

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By: Brad Ford http://blogs.reuters.com/felix-salmon/2009/09/21/over-half-a-million-strategic-defaulters-in-2008/comment-page-1/#comment-6985 Mon, 21 Sep 2009 19:15:06 +0000 http://blogs.reuters.com/felix-salmon/2009/09/21/over-half-a-million-strategic-defaulters-in-2008/#comment-6985 Various credit and anti-discrination laws would make it difficult time screaning out likely strategic defaulters.

Can you imagine what would happen if an African-American/Hispanic/Gay family with a 780 credit score and the income to support an $XXX,XXXX mortgage got turned down or charged a higher interest rate?

The only real solution to the problem is to ensure borrowers never get in a position of significant negative equity by:
1. Making sure appraisals are tough and accurate, and
2. Forcing borrowers to put significant money down.

A “no money down” mortgage is a non-recourse state is just plain stupid.

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