Viral Nature of Walking Away

[davelj]

[quote=Arraya]Norms governing homeowner behavior stand in sharp contrast to norms governing lenders, who seek to maximize profits or minimize losses irrespective of concerns of morality or social responsibility. This norm asymmetry leads to distributional inequalities in which individual homeowners shoulder a disproportionate burden from the housing collapse.[/quote]

The reason that this “norm asymmetry leads to distributional inequalities” is that most folks will concede that without the buyer/borrower making the first move – that is, finding a property they first want to buy and then seeking out a lender to finance it – a mortgage isn’t created. (The Prime Mover argument.)

Since the buyer/borrower is the prime mover, why shouldn’t s/he shoulder a disproportionate burden from the housing collapse? It seems completely logical to me given the nature of how the transaction arises in the first place.

[scaredyclassic]

chicken and egg. there wouldn’t be a buyer without a mortgage. least not at the dumb price possible with amortgage. the bank sts it all in motion by making the money available.

kinda like drugs. the bank is the dealer, the homedweller is the druggie. yeah, there wouldn’t be any drug trade without eager users, but ya gotta have a salesman and there is definitely nothing happening without asteady supply of drugs. i’d say the prime mover in the drug example is the drug dealer, adn i’d say the prime mover in real estate is the finance. it’s all about access to big piles of money, rights?

let’s face it davelj. everything in this world has a price. the moral component has probably been quanitified, spliced diced and tranched, and the banks know exactly what that component is worth.

there is no morality here, at least not as I understand it. there is a “qualm” a historic “hesitancy” which makes the bank slightly more willign to lend at a certain rate. take it away, and you ahve the exact same number of mortgages at a different rate. what banks are gonna say, eff this, we’re never lending again, these homeowners are cutthroat? please.

maybe in your biz, where you have one-off larger transactions, the honor of the borrower would playa much bigger role.

but here, it’s just more processed poultry for the slaughterhouse, all weighed and priced in advance.

we’re all just chicken wings, backs and beaks in an infernal machine that cares not a whit about us, any mroe than the poultry farmer cares for any chicken, or any drug dealer cares for any particular crackhead.

[scaredyclassic]

chicken and egg. there wouldn’t be a buyer without a mortgage. least not at the dumb price possible with amortgage. the bank sts it all in motion by making the money available.

kinda like drugs. the bank is the dealer, the homedweller is the druggie. yeah, there wouldn’t be any drug trade without eager users, but ya gotta have a salesman and there is definitely nothing happening without asteady supply of drugs. i’d say the prime mover in the drug example is the drug dealer, adn i’d say the prime mover in real estate is the finance. it’s all about access to big piles of money, rights?

let’s face it davelj. everything in this world has a price. the moral component has probably been quanitified, spliced diced and tranched, and the banks know exactly what that component is worth.

there is no morality here, at least not as I understand it. there is a “qualm” a historic “hesitancy” which makes the bank slightly more willign to lend at a certain rate. take it away, and you ahve the exact same number of mortgages at a different rate. what banks are gonna say, eff this, we’re never lending again, these homeowners are cutthroat? please.

maybe in your biz, where you have one-off larger transactions, the honor of the borrower would playa much bigger role.

but here, it’s just more processed poultry for the slaughterhouse, all weighed and priced in advance.

we’re all just chicken wings, backs and beaks in an infernal machine that cares not a whit about us, any mroe than the poultry farmer cares for any chicken, or any drug dealer cares for any particular crackhead.

[scaredyclassic]

chicken and egg. there wouldn’t be a buyer without a mortgage. least not at the dumb price possible with amortgage. the bank sts it all in motion by making the money available.

kinda like drugs. the bank is the dealer, the homedweller is the druggie. yeah, there wouldn’t be any drug trade without eager users, but ya gotta have a salesman and there is definitely nothing happening without asteady supply of drugs. i’d say the prime mover in the drug example is the drug dealer, adn i’d say the prime mover in real estate is the finance. it’s all about access to big piles of money, rights?

let’s face it davelj. everything in this world has a price. the moral component has probably been quanitified, spliced diced and tranched, and the banks know exactly what that component is worth.

there is no morality here, at least not as I understand it. there is a “qualm” a historic “hesitancy” which makes the bank slightly more willign to lend at a certain rate. take it away, and you ahve the exact same number of mortgages at a different rate. what banks are gonna say, eff this, we’re never lending again, these homeowners are cutthroat? please.

maybe in your biz, where you have one-off larger transactions, the honor of the borrower would playa much bigger role.

but here, it’s just more processed poultry for the slaughterhouse, all weighed and priced in advance.

we’re all just chicken wings, backs and beaks in an infernal machine that cares not a whit about us, any mroe than the poultry farmer cares for any chicken, or any drug dealer cares for any particular crackhead.

[scaredyclassic]

chicken and egg. there wouldn’t be a buyer without a mortgage. least not at the dumb price possible with amortgage. the bank sts it all in motion by making the money available.

kinda like drugs. the bank is the dealer, the homedweller is the druggie. yeah, there wouldn’t be any drug trade without eager users, but ya gotta have a salesman and there is definitely nothing happening without asteady supply of drugs. i’d say the prime mover in the drug example is the drug dealer, adn i’d say the prime mover in real estate is the finance. it’s all about access to big piles of money, rights?

let’s face it davelj. everything in this world has a price. the moral component has probably been quanitified, spliced diced and tranched, and the banks know exactly what that component is worth.

there is no morality here, at least not as I understand it. there is a “qualm” a historic “hesitancy” which makes the bank slightly more willign to lend at a certain rate. take it away, and you ahve the exact same number of mortgages at a different rate. what banks are gonna say, eff this, we’re never lending again, these homeowners are cutthroat? please.

maybe in your biz, where you have one-off larger transactions, the honor of the borrower would playa much bigger role.

but here, it’s just more processed poultry for the slaughterhouse, all weighed and priced in advance.

we’re all just chicken wings, backs and beaks in an infernal machine that cares not a whit about us, any mroe than the poultry farmer cares for any chicken, or any drug dealer cares for any particular crackhead.

[scaredyclassic]

chicken and egg. there wouldn’t be a buyer without a mortgage. least not at the dumb price possible with amortgage. the bank sts it all in motion by making the money available.

kinda like drugs. the bank is the dealer, the homedweller is the druggie. yeah, there wouldn’t be any drug trade without eager users, but ya gotta have a salesman and there is definitely nothing happening without asteady supply of drugs. i’d say the prime mover in the drug example is the drug dealer, adn i’d say the prime mover in real estate is the finance. it’s all about access to big piles of money, rights?

let’s face it davelj. everything in this world has a price. the moral component has probably been quanitified, spliced diced and tranched, and the banks know exactly what that component is worth.

there is no morality here, at least not as I understand it. there is a “qualm” a historic “hesitancy” which makes the bank slightly more willign to lend at a certain rate. take it away, and you ahve the exact same number of mortgages at a different rate. what banks are gonna say, eff this, we’re never lending again, these homeowners are cutthroat? please.

maybe in your biz, where you have one-off larger transactions, the honor of the borrower would playa much bigger role.

but here, it’s just more processed poultry for the slaughterhouse, all weighed and priced in advance.

we’re all just chicken wings, backs and beaks in an infernal machine that cares not a whit about us, any mroe than the poultry farmer cares for any chicken, or any drug dealer cares for any particular crackhead.

[scaredyclassic]

it’s nto like im sort of cutthroat operator, I’ve never bought a house, have no debt, eschew debt, adn if I can’t buya a damned house in about the next three years i probably won’t because i don’t knwo that I’d be comfortable with how mcuh longer id intend to live in it. i still think anyone who doesn’t maximize their family financial situation because they think they’re being honorable is borderline insane.

[scaredyclassic]

it’s nto like im sort of cutthroat operator, I’ve never bought a house, have no debt, eschew debt, adn if I can’t buya a damned house in about the next three years i probably won’t because i don’t knwo that I’d be comfortable with how mcuh longer id intend to live in it. i still think anyone who doesn’t maximize their family financial situation because they think they’re being honorable is borderline insane.

[scaredyclassic]

it’s nto like im sort of cutthroat operator, I’ve never bought a house, have no debt, eschew debt, adn if I can’t buya a damned house in about the next three years i probably won’t because i don’t knwo that I’d be comfortable with how mcuh longer id intend to live in it. i still think anyone who doesn’t maximize their family financial situation because they think they’re being honorable is borderline insane.

[scaredyclassic]

it’s nto like im sort of cutthroat operator, I’ve never bought a house, have no debt, eschew debt, adn if I can’t buya a damned house in about the next three years i probably won’t because i don’t knwo that I’d be comfortable with how mcuh longer id intend to live in it. i still think anyone who doesn’t maximize their family financial situation because they think they’re being honorable is borderline insane.

[scaredyclassic]

it’s nto like im sort of cutthroat operator, I’ve never bought a house, have no debt, eschew debt, adn if I can’t buya a damned house in about the next three years i probably won’t because i don’t knwo that I’d be comfortable with how mcuh longer id intend to live in it. i still think anyone who doesn’t maximize their family financial situation because they think they’re being honorable is borderline insane.

[Arraya]

Dave, what does “fault” have to do with anything. Nobody makes a decision on whether to keep bubble priced home based on “fault” of a poor market timing decision, that is ridiculous. If they want to and do not, it is not because of the righteousness of unnecessarily punishing themselves for a poor market timing decision. That would be masochistic and insane. Especially with a family involved. It’s because of exactly what the paper points out. Commercial strategic defaults are not uncommon at all and for some reason people don’t get in the hissy fit about them and place a “moral” component on it nor do the holders of the mortgage place a “fault” component on their decision to walk. It’s a cost benefit analysis based on their individual financial survival and well being. And perfectly socially acceptable which leads into the norm asymmetry and distributional inequalities component of the argument. Different sets of “social” rules for business practices of people and corporations putting people at a disadvantage.

[Arraya]

Dave, what does “fault” have to do with anything. Nobody makes a decision on whether to keep bubble priced home based on “fault” of a poor market timing decision, that is ridiculous. If they want to and do not, it is not because of the righteousness of unnecessarily punishing themselves for a poor market timing decision. That would be masochistic and insane. Especially with a family involved. It’s because of exactly what the paper points out. Commercial strategic defaults are not uncommon at all and for some reason people don’t get in the hissy fit about them and place a “moral” component on it nor do the holders of the mortgage place a “fault” component on their decision to walk. It’s a cost benefit analysis based on their individual financial survival and well being. And perfectly socially acceptable which leads into the norm asymmetry and distributional inequalities component of the argument. Different sets of “social” rules for business practices of people and corporations putting people at a disadvantage.

[Arraya]

Dave, what does “fault” have to do with anything. Nobody makes a decision on whether to keep bubble priced home based on “fault” of a poor market timing decision, that is ridiculous. If they want to and do not, it is not because of the righteousness of unnecessarily punishing themselves for a poor market timing decision. That would be masochistic and insane. Especially with a family involved. It’s because of exactly what the paper points out. Commercial strategic defaults are not uncommon at all and for some reason people don’t get in the hissy fit about them and place a “moral” component on it nor do the holders of the mortgage place a “fault” component on their decision to walk. It’s a cost benefit analysis based on their individual financial survival and well being. And perfectly socially acceptable which leads into the norm asymmetry and distributional inequalities component of the argument. Different sets of “social” rules for business practices of people and corporations putting people at a disadvantage.

[Arraya]

Dave, what does “fault” have to do with anything. Nobody makes a decision on whether to keep bubble priced home based on “fault” of a poor market timing decision, that is ridiculous. If they want to and do not, it is not because of the righteousness of unnecessarily punishing themselves for a poor market timing decision. That would be masochistic and insane. Especially with a family involved. It’s because of exactly what the paper points out. Commercial strategic defaults are not uncommon at all and for some reason people don’t get in the hissy fit about them and place a “moral” component on it nor do the holders of the mortgage place a “fault” component on their decision to walk. It’s a cost benefit analysis based on their individual financial survival and well being. And perfectly socially acceptable which leads into the norm asymmetry and distributional inequalities component of the argument. Different sets of “social” rules for business practices of people and corporations putting people at a disadvantage.

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