[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]

nsr, I don’t know the history of the non-recourse loan. I am interested, though. Can you describe it a bit more?

[patientrenter]

nsr, I don’t know the history of the non-recourse loan. I am interested, though. Can you describe it a bit more?

[patientrenter]

nsr, I don’t know the history of the non-recourse loan. I am interested, though. Can you describe it a bit more?

[patientrenter]

nsr, I don’t know the history of the non-recourse loan. I am interested, though. Can you describe it a bit more?

[patientrenter]

nsr, I don’t know the history of the non-recourse loan. I am interested, though. Can you describe it a bit more?

[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.

[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.

[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.

[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.

[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.

[patientrenter]

[quote=peterb]I cant believe this is even a discussion topic. It’s business, get over it. Be glad it’s non-recourse.[/quote]

Just when it’s dying down, someone raises the red flag!

There are several reasons why it’s a discussion topic.

1. Lenders didn’t choose to make these loans non-recourse. California lawmakers made that choice. That makes us all (indirectly) responsible for the loan forgiveness.

2. Most of the losses caused by a failure to repay loans against homes are borne by taxpayers. Most of the rest will be borne by net savers as low interest rates now and future inflation depress their net worth. A considerable amount will also be borne by pensioners and others whose income relies on investments that pay good interest, and are repaid in full.

3. “Be glad”. I’d be glad only if I thought that taking money from one person, without their agreement, and giving it to another was OK.

4. Not everyone subscribes to the “if it’s legal, it’s OK” theory of social behavior. I wouldn’t want to do business with that kind of person.

[Author]

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