PC, I don’t think the banks will let them walk that easily this time. A 1/2 million isn’t chump change, even to a mulit-billion dollar bank.
Also, what about deficiency judgements, it’s longer and more painful to foreclose, but if the bank is looking at that substantial of a loss, do you see a switch to judicial foreclosure so the lenders can exploit the lying in the ‘liar’s loans’?
Finally, we must keep in mind that most will never admit to themselves that their $800,000 house, that they owe $880,000 on, is really worth $400,000. most will never even realize, what they’ll know is they can’t sell it.
In all honesty, I’m suspecting the housing market is going to become really illiquid. Possibly to the point that the only thing available on the market is prior-foreclosure resales. Those resales will likely be in our target range of 40-50% from peak, but I suspect that’ll be all we have to choose from. People will rationalize that their house is really still worth $800,000, just once all these foreclosures clear out…
