[quote=patientrenter][quote=trex]If everyone were this rational, the banks would behave more responsibly as well , requiring down payments and real income….[/quote]
Getting the banks to be more responsible about home loans requires more than rational behavior by borrowers. It also requires a removal of govt and private mortgage insurance schemes. The presence of these schemes completely undermines incentives for responsible loan underwriting.
When we have responsible home loans (no FHA or PMI or other nonsense) then we will have a sensible market for homes. Will this ever happen? Probably not in my lifetime.[/quote]
Well said, PR.
Quite frankly, I don’t blame the walk-aways. Ethical behavior can be taught to an extent, but if the people at the bottom continue to see that the people at the top are benefitting at their expense (bailouts of banks/executives who took huge risks to make huge gains), then they will begin to emulate the same behavior.
If the govt wants to stop this, then they have to hold the people accountable **at the top** who created this mess — jail time and tremendous fines that essentially bankrupt these fraudsters and their families for life. Only after they do that can they expect “ethical” behavior from the underlings.
