Ethical considerations (none) for defaulting on non-recourse loan.

[NotCranky]

[quote=patientrenter]1. If a law is made that says that anyone whose blog handle is Russell, formerly Rustico, can take all the cash he sees, does that mean you would do it?

2. We are, collectively, responsible for the laws. Our lawmakers answer to us. We may be in a permanent minority, or disagree with the laws sometimes, but it’s our society and our laws. If we make laws that lead to unfair or bad results, we have a collective responsibility for the outcomes, and a personal responsibility to wake up and do what we can to change those laws.

3. Lenders have lots of responsibility in this, but if a law is passed that prevents any loan from being recourse, then it pushes lenders into doing things that are dangerous and likely to lead to losses. Theoretically, lenders can simply close up shop if they disagree with non-recourse loans, but we all know that most won’t, even if it’s the right thing. You can push people, and even banks, into doing thing they wouldn’t otherwise do. If you do push, you are also responsible.[/quote]

PR, Theoretically, even if banks are successful at getting permission from the federal government to take all the money they see, they won’t blow a bubble with a ponzi scheme in a non-recourse state and across the nation in order to take it. Lots of people should go to jail for creating a public nuisance if nothing else. I am not talking about the little fish who did take the fog a mirror get a loan policy the lenders aggressively and without duress promoted.

The idea that the banks or their enablers who are now fixing the problem deserve any empathy really rubs me the wrong way. Poor banky wanky. Not that I condone all of the of the particular things FB’s do but the banks get what the deserve. I mean, in theory they could.Possibly they could? Yeah right.

[patientrenter]

[quote=analyst]
Lenders were/are not pushed to do anything dangerous or likely to lead to losses.

They are required only to use realistic appraisal values, and maintain appropriate loan-to-value ratios. This is easy, boring, and the path to a reasonable profit, but not the path to riches.

That is why the charlatans who engineered the real estate bubble, and are responsible for all the damage that it caused, were not satisfied with the arrangement.[/quote]

analyst, it sounds like borrowers have no responsibilities, and lenders have them all. I guess I can’t subscribe to a theory that says that the person getting the money has 0 responsibility, and the person giving the money has 100%. In a transaction where you let someone use something of yours of great value, who is more exposed to losses?

If I rent your house while you’re on your next vacation, does the fact that the rent was high, or you didn’t clean up first, or something else, mean I can trash your house and it’s OK? The money lent out in a mortgage ultimately came from other people, and they need it all back, with a little income, just like you if you rented out your house. They are very exposed, just as you are renting out. Saying it’s OK to trash the house, or default on the loan, is going to have serious consequences on people’s future behavior.

Right now, the world is awash in savings. We can borrow like drunken sailors, and default at phenomenal rates, and it’s OK, we can still borrow more. But that’s not going to last forever. Down the road, world savings will return to normal. When that happens, do you think that people will want to lend to US homeowners? Or to a nation that thinks that it’s up to the lenders to make sure the loan is repaid?

[patientrenter]

[quote=analyst]
Lenders were/are not pushed to do anything dangerous or likely to lead to losses.

They are required only to use realistic appraisal values, and maintain appropriate loan-to-value ratios. This is easy, boring, and the path to a reasonable profit, but not the path to riches.

That is why the charlatans who engineered the real estate bubble, and are responsible for all the damage that it caused, were not satisfied with the arrangement.[/quote]

analyst, it sounds like borrowers have no responsibilities, and lenders have them all. I guess I can’t subscribe to a theory that says that the person getting the money has 0 responsibility, and the person giving the money has 100%. In a transaction where you let someone use something of yours of great value, who is more exposed to losses?

If I rent your house while you’re on your next vacation, does the fact that the rent was high, or you didn’t clean up first, or something else, mean I can trash your house and it’s OK? The money lent out in a mortgage ultimately came from other people, and they need it all back, with a little income, just like you if you rented out your house. They are very exposed, just as you are renting out. Saying it’s OK to trash the house, or default on the loan, is going to have serious consequences on people’s future behavior.

Right now, the world is awash in savings. We can borrow like drunken sailors, and default at phenomenal rates, and it’s OK, we can still borrow more. But that’s not going to last forever. Down the road, world savings will return to normal. When that happens, do you think that people will want to lend to US homeowners? Or to a nation that thinks that it’s up to the lenders to make sure the loan is repaid?

[patientrenter]

[quote=analyst]
Lenders were/are not pushed to do anything dangerous or likely to lead to losses.

They are required only to use realistic appraisal values, and maintain appropriate loan-to-value ratios. This is easy, boring, and the path to a reasonable profit, but not the path to riches.

That is why the charlatans who engineered the real estate bubble, and are responsible for all the damage that it caused, were not satisfied with the arrangement.[/quote]

analyst, it sounds like borrowers have no responsibilities, and lenders have them all. I guess I can’t subscribe to a theory that says that the person getting the money has 0 responsibility, and the person giving the money has 100%. In a transaction where you let someone use something of yours of great value, who is more exposed to losses?

If I rent your house while you’re on your next vacation, does the fact that the rent was high, or you didn’t clean up first, or something else, mean I can trash your house and it’s OK? The money lent out in a mortgage ultimately came from other people, and they need it all back, with a little income, just like you if you rented out your house. They are very exposed, just as you are renting out. Saying it’s OK to trash the house, or default on the loan, is going to have serious consequences on people’s future behavior.

Right now, the world is awash in savings. We can borrow like drunken sailors, and default at phenomenal rates, and it’s OK, we can still borrow more. But that’s not going to last forever. Down the road, world savings will return to normal. When that happens, do you think that people will want to lend to US homeowners? Or to a nation that thinks that it’s up to the lenders to make sure the loan is repaid?

[patientrenter]

[quote=analyst]
Lenders were/are not pushed to do anything dangerous or likely to lead to losses.

They are required only to use realistic appraisal values, and maintain appropriate loan-to-value ratios. This is easy, boring, and the path to a reasonable profit, but not the path to riches.

That is why the charlatans who engineered the real estate bubble, and are responsible for all the damage that it caused, were not satisfied with the arrangement.[/quote]

analyst, it sounds like borrowers have no responsibilities, and lenders have them all. I guess I can’t subscribe to a theory that says that the person getting the money has 0 responsibility, and the person giving the money has 100%. In a transaction where you let someone use something of yours of great value, who is more exposed to losses?

If I rent your house while you’re on your next vacation, does the fact that the rent was high, or you didn’t clean up first, or something else, mean I can trash your house and it’s OK? The money lent out in a mortgage ultimately came from other people, and they need it all back, with a little income, just like you if you rented out your house. They are very exposed, just as you are renting out. Saying it’s OK to trash the house, or default on the loan, is going to have serious consequences on people’s future behavior.

Right now, the world is awash in savings. We can borrow like drunken sailors, and default at phenomenal rates, and it’s OK, we can still borrow more. But that’s not going to last forever. Down the road, world savings will return to normal. When that happens, do you think that people will want to lend to US homeowners? Or to a nation that thinks that it’s up to the lenders to make sure the loan is repaid?

[patientrenter]

[quote=analyst]
Lenders were/are not pushed to do anything dangerous or likely to lead to losses.

They are required only to use realistic appraisal values, and maintain appropriate loan-to-value ratios. This is easy, boring, and the path to a reasonable profit, but not the path to riches.

That is why the charlatans who engineered the real estate bubble, and are responsible for all the damage that it caused, were not satisfied with the arrangement.[/quote]

analyst, it sounds like borrowers have no responsibilities, and lenders have them all. I guess I can’t subscribe to a theory that says that the person getting the money has 0 responsibility, and the person giving the money has 100%. In a transaction where you let someone use something of yours of great value, who is more exposed to losses?

If I rent your house while you’re on your next vacation, does the fact that the rent was high, or you didn’t clean up first, or something else, mean I can trash your house and it’s OK? The money lent out in a mortgage ultimately came from other people, and they need it all back, with a little income, just like you if you rented out your house. They are very exposed, just as you are renting out. Saying it’s OK to trash the house, or default on the loan, is going to have serious consequences on people’s future behavior.

Right now, the world is awash in savings. We can borrow like drunken sailors, and default at phenomenal rates, and it’s OK, we can still borrow more. But that’s not going to last forever. Down the road, world savings will return to normal. When that happens, do you think that people will want to lend to US homeowners? Or to a nation that thinks that it’s up to the lenders to make sure the loan is repaid?

[patientrenter]

[quote=Russell]

PR, Theoretically, even if banks are successful at getting permission from the federal government to take all the money they see, they won’t blow a bubble with a ponzi scheme in a non-recourse state and across the nation in order to take it. Lots of people should go to jail for creating a public nuisance if nothing else. I am not talking about the little fish who did take the fog a mirror get a loan policy the lenders aggressively and without duress promoted.

The idea that the banks or their enablers who are now fixing the problem deserve any empathy really rubs me the wrong way. Poor banky wanky. Not that I condone all of the of the particular things FB’s do but the banks get what the deserve. I mean, in theory they could.Possibly they could? Yeah right.[/quote]

I certainly don’t have much empathy for the bankers. As you point out, what many of them did should be a criminal offense (and might even be prosecutable, if the pols had enough spine to enforce the laws in that direction). I’d love to see the people who directed that crappy mortgages get AAA ratings go the slammer for 15 years. And the folks who ran the lenders that were shoveling liar loans to the investment community. Etc.

But just because all those people were doing bad things – really bad things – doesn’t give borrowers a free pass. Nor does it give voters a free pass. We aren’t exactly pounding down the doors of our Congressman to remove all the loan and price and tax and other supports for a bloated housing sector. In fact, we rather like those things. So when a few individuals end up doing our dirty work for us, we can blame them when things go wrong, but we are at least as much to blame. When everyone wanted to be able to buy, with almost none of their money, an asset that was virtually guaranteed to make them rich, they weren’t complaining about Angelo Mozilo. If he hadn’t done what what he did, someone else would have. We created the environment, and a few people came forward to serve up what we asked for.

Not all of us, but most….

And allowing borrowers to punish the banks now sounds like fun – just retribution and all. But the problem is that almost all banks are economically insolvent. All that’s holding them up is money from taxpayers, or the promise of money from taxpayers. So when we whack the banks, we’re not whacking the bankers, we’re whacking the taxpayers. That’s your neighbors.

[patientrenter]

[quote=Russell]

PR, Theoretically, even if banks are successful at getting permission from the federal government to take all the money they see, they won’t blow a bubble with a ponzi scheme in a non-recourse state and across the nation in order to take it. Lots of people should go to jail for creating a public nuisance if nothing else. I am not talking about the little fish who did take the fog a mirror get a loan policy the lenders aggressively and without duress promoted.

The idea that the banks or their enablers who are now fixing the problem deserve any empathy really rubs me the wrong way. Poor banky wanky. Not that I condone all of the of the particular things FB’s do but the banks get what the deserve. I mean, in theory they could.Possibly they could? Yeah right.[/quote]

I certainly don’t have much empathy for the bankers. As you point out, what many of them did should be a criminal offense (and might even be prosecutable, if the pols had enough spine to enforce the laws in that direction). I’d love to see the people who directed that crappy mortgages get AAA ratings go the slammer for 15 years. And the folks who ran the lenders that were shoveling liar loans to the investment community. Etc.

But just because all those people were doing bad things – really bad things – doesn’t give borrowers a free pass. Nor does it give voters a free pass. We aren’t exactly pounding down the doors of our Congressman to remove all the loan and price and tax and other supports for a bloated housing sector. In fact, we rather like those things. So when a few individuals end up doing our dirty work for us, we can blame them when things go wrong, but we are at least as much to blame. When everyone wanted to be able to buy, with almost none of their money, an asset that was virtually guaranteed to make them rich, they weren’t complaining about Angelo Mozilo. If he hadn’t done what what he did, someone else would have. We created the environment, and a few people came forward to serve up what we asked for.

Not all of us, but most….

And allowing borrowers to punish the banks now sounds like fun – just retribution and all. But the problem is that almost all banks are economically insolvent. All that’s holding them up is money from taxpayers, or the promise of money from taxpayers. So when we whack the banks, we’re not whacking the bankers, we’re whacking the taxpayers. That’s your neighbors.

[patientrenter]

[quote=Russell]

PR, Theoretically, even if banks are successful at getting permission from the federal government to take all the money they see, they won’t blow a bubble with a ponzi scheme in a non-recourse state and across the nation in order to take it. Lots of people should go to jail for creating a public nuisance if nothing else. I am not talking about the little fish who did take the fog a mirror get a loan policy the lenders aggressively and without duress promoted.

The idea that the banks or their enablers who are now fixing the problem deserve any empathy really rubs me the wrong way. Poor banky wanky. Not that I condone all of the of the particular things FB’s do but the banks get what the deserve. I mean, in theory they could.Possibly they could? Yeah right.[/quote]

I certainly don’t have much empathy for the bankers. As you point out, what many of them did should be a criminal offense (and might even be prosecutable, if the pols had enough spine to enforce the laws in that direction). I’d love to see the people who directed that crappy mortgages get AAA ratings go the slammer for 15 years. And the folks who ran the lenders that were shoveling liar loans to the investment community. Etc.

But just because all those people were doing bad things – really bad things – doesn’t give borrowers a free pass. Nor does it give voters a free pass. We aren’t exactly pounding down the doors of our Congressman to remove all the loan and price and tax and other supports for a bloated housing sector. In fact, we rather like those things. So when a few individuals end up doing our dirty work for us, we can blame them when things go wrong, but we are at least as much to blame. When everyone wanted to be able to buy, with almost none of their money, an asset that was virtually guaranteed to make them rich, they weren’t complaining about Angelo Mozilo. If he hadn’t done what what he did, someone else would have. We created the environment, and a few people came forward to serve up what we asked for.

Not all of us, but most….

And allowing borrowers to punish the banks now sounds like fun – just retribution and all. But the problem is that almost all banks are economically insolvent. All that’s holding them up is money from taxpayers, or the promise of money from taxpayers. So when we whack the banks, we’re not whacking the bankers, we’re whacking the taxpayers. That’s your neighbors.

[patientrenter]

[quote=Russell]

PR, Theoretically, even if banks are successful at getting permission from the federal government to take all the money they see, they won’t blow a bubble with a ponzi scheme in a non-recourse state and across the nation in order to take it. Lots of people should go to jail for creating a public nuisance if nothing else. I am not talking about the little fish who did take the fog a mirror get a loan policy the lenders aggressively and without duress promoted.

The idea that the banks or their enablers who are now fixing the problem deserve any empathy really rubs me the wrong way. Poor banky wanky. Not that I condone all of the of the particular things FB’s do but the banks get what the deserve. I mean, in theory they could.Possibly they could? Yeah right.[/quote]

I certainly don’t have much empathy for the bankers. As you point out, what many of them did should be a criminal offense (and might even be prosecutable, if the pols had enough spine to enforce the laws in that direction). I’d love to see the people who directed that crappy mortgages get AAA ratings go the slammer for 15 years. And the folks who ran the lenders that were shoveling liar loans to the investment community. Etc.

But just because all those people were doing bad things – really bad things – doesn’t give borrowers a free pass. Nor does it give voters a free pass. We aren’t exactly pounding down the doors of our Congressman to remove all the loan and price and tax and other supports for a bloated housing sector. In fact, we rather like those things. So when a few individuals end up doing our dirty work for us, we can blame them when things go wrong, but we are at least as much to blame. When everyone wanted to be able to buy, with almost none of their money, an asset that was virtually guaranteed to make them rich, they weren’t complaining about Angelo Mozilo. If he hadn’t done what what he did, someone else would have. We created the environment, and a few people came forward to serve up what we asked for.

Not all of us, but most….

And allowing borrowers to punish the banks now sounds like fun – just retribution and all. But the problem is that almost all banks are economically insolvent. All that’s holding them up is money from taxpayers, or the promise of money from taxpayers. So when we whack the banks, we’re not whacking the bankers, we’re whacking the taxpayers. That’s your neighbors.

[patientrenter]

[quote=Russell]

PR, Theoretically, even if banks are successful at getting permission from the federal government to take all the money they see, they won’t blow a bubble with a ponzi scheme in a non-recourse state and across the nation in order to take it. Lots of people should go to jail for creating a public nuisance if nothing else. I am not talking about the little fish who did take the fog a mirror get a loan policy the lenders aggressively and without duress promoted.

The idea that the banks or their enablers who are now fixing the problem deserve any empathy really rubs me the wrong way. Poor banky wanky. Not that I condone all of the of the particular things FB’s do but the banks get what the deserve. I mean, in theory they could.Possibly they could? Yeah right.[/quote]

I certainly don’t have much empathy for the bankers. As you point out, what many of them did should be a criminal offense (and might even be prosecutable, if the pols had enough spine to enforce the laws in that direction). I’d love to see the people who directed that crappy mortgages get AAA ratings go the slammer for 15 years. And the folks who ran the lenders that were shoveling liar loans to the investment community. Etc.

But just because all those people were doing bad things – really bad things – doesn’t give borrowers a free pass. Nor does it give voters a free pass. We aren’t exactly pounding down the doors of our Congressman to remove all the loan and price and tax and other supports for a bloated housing sector. In fact, we rather like those things. So when a few individuals end up doing our dirty work for us, we can blame them when things go wrong, but we are at least as much to blame. When everyone wanted to be able to buy, with almost none of their money, an asset that was virtually guaranteed to make them rich, they weren’t complaining about Angelo Mozilo. If he hadn’t done what what he did, someone else would have. We created the environment, and a few people came forward to serve up what we asked for.

Not all of us, but most….

And allowing borrowers to punish the banks now sounds like fun – just retribution and all. But the problem is that almost all banks are economically insolvent. All that’s holding them up is money from taxpayers, or the promise of money from taxpayers. So when we whack the banks, we’re not whacking the bankers, we’re whacking the taxpayers. That’s your neighbors.

[analyst]

[quote=patientrenter][quote=analyst]
Lenders were/are not pushed to do anything dangerous or likely to lead to losses.

They are required only to use realistic appraisal values, and maintain appropriate loan-to-value ratios. This is easy, boring, and the path to a reasonable profit, but not the path to riches.

That is why the charlatans who engineered the real estate bubble, and are responsible for all the damage that it caused, were not satisfied with the arrangement.[/quote]

analyst, it sounds like borrowers have no responsibilities, and lenders have them all. I guess I can’t subscribe to a theory that says that the person getting the money has 0 responsibility, and the person giving the money has 100%. In a transaction where you let someone use something of yours of great value, who is more exposed to losses?[/quote]

The borrower gets no money. The money goes to the seller of the home. The borrower gets a home. If the borrower defaults, he gives up what he got, the home. The only reason the borrower is upside-down is because he was deceived about the value of the home. Yes, as with all con games, the borrowers greed plays a role in his falling for the con game. That is not a reason to consider anybody but the con artist as the main culprit.

The money, in the vast majority of cases, was not the lender’s money. It was some investor’s money, who was persuaded by various deceptions to put his money at the disposal of the operators of the real estate bubble Ponzi scheme. The lender took a percentage fee, sent the money to a safe haven, and is out of the loop, unless/until the prosecutors pursue, which is the outcome I am promoting.

In non-recourse jurisdictions, for purchase money loans to owner-occupants, the lender does have 100% of the responsibility, by law, with fair warning.

[analyst]

[quote=patientrenter][quote=analyst]
Lenders were/are not pushed to do anything dangerous or likely to lead to losses.

They are required only to use realistic appraisal values, and maintain appropriate loan-to-value ratios. This is easy, boring, and the path to a reasonable profit, but not the path to riches.

That is why the charlatans who engineered the real estate bubble, and are responsible for all the damage that it caused, were not satisfied with the arrangement.[/quote]

analyst, it sounds like borrowers have no responsibilities, and lenders have them all. I guess I can’t subscribe to a theory that says that the person getting the money has 0 responsibility, and the person giving the money has 100%. In a transaction where you let someone use something of yours of great value, who is more exposed to losses?[/quote]

The borrower gets no money. The money goes to the seller of the home. The borrower gets a home. If the borrower defaults, he gives up what he got, the home. The only reason the borrower is upside-down is because he was deceived about the value of the home. Yes, as with all con games, the borrowers greed plays a role in his falling for the con game. That is not a reason to consider anybody but the con artist as the main culprit.

The money, in the vast majority of cases, was not the lender’s money. It was some investor’s money, who was persuaded by various deceptions to put his money at the disposal of the operators of the real estate bubble Ponzi scheme. The lender took a percentage fee, sent the money to a safe haven, and is out of the loop, unless/until the prosecutors pursue, which is the outcome I am promoting.

In non-recourse jurisdictions, for purchase money loans to owner-occupants, the lender does have 100% of the responsibility, by law, with fair warning.

[analyst]

[quote=patientrenter][quote=analyst]
Lenders were/are not pushed to do anything dangerous or likely to lead to losses.

They are required only to use realistic appraisal values, and maintain appropriate loan-to-value ratios. This is easy, boring, and the path to a reasonable profit, but not the path to riches.

That is why the charlatans who engineered the real estate bubble, and are responsible for all the damage that it caused, were not satisfied with the arrangement.[/quote]

analyst, it sounds like borrowers have no responsibilities, and lenders have them all. I guess I can’t subscribe to a theory that says that the person getting the money has 0 responsibility, and the person giving the money has 100%. In a transaction where you let someone use something of yours of great value, who is more exposed to losses?[/quote]

The borrower gets no money. The money goes to the seller of the home. The borrower gets a home. If the borrower defaults, he gives up what he got, the home. The only reason the borrower is upside-down is because he was deceived about the value of the home. Yes, as with all con games, the borrowers greed plays a role in his falling for the con game. That is not a reason to consider anybody but the con artist as the main culprit.

The money, in the vast majority of cases, was not the lender’s money. It was some investor’s money, who was persuaded by various deceptions to put his money at the disposal of the operators of the real estate bubble Ponzi scheme. The lender took a percentage fee, sent the money to a safe haven, and is out of the loop, unless/until the prosecutors pursue, which is the outcome I am promoting.

In non-recourse jurisdictions, for purchase money loans to owner-occupants, the lender does have 100% of the responsibility, by law, with fair warning.

[analyst]

[quote=patientrenter][quote=analyst]
Lenders were/are not pushed to do anything dangerous or likely to lead to losses.

They are required only to use realistic appraisal values, and maintain appropriate loan-to-value ratios. This is easy, boring, and the path to a reasonable profit, but not the path to riches.

That is why the charlatans who engineered the real estate bubble, and are responsible for all the damage that it caused, were not satisfied with the arrangement.[/quote]

analyst, it sounds like borrowers have no responsibilities, and lenders have them all. I guess I can’t subscribe to a theory that says that the person getting the money has 0 responsibility, and the person giving the money has 100%. In a transaction where you let someone use something of yours of great value, who is more exposed to losses?[/quote]

The borrower gets no money. The money goes to the seller of the home. The borrower gets a home. If the borrower defaults, he gives up what he got, the home. The only reason the borrower is upside-down is because he was deceived about the value of the home. Yes, as with all con games, the borrowers greed plays a role in his falling for the con game. That is not a reason to consider anybody but the con artist as the main culprit.

The money, in the vast majority of cases, was not the lender’s money. It was some investor’s money, who was persuaded by various deceptions to put his money at the disposal of the operators of the real estate bubble Ponzi scheme. The lender took a percentage fee, sent the money to a safe haven, and is out of the loop, unless/until the prosecutors pursue, which is the outcome I am promoting.

In non-recourse jurisdictions, for purchase money loans to owner-occupants, the lender does have 100% of the responsibility, by law, with fair warning.

[Author]

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