Report shows strategic defaults increasing

User Forum Topic
Submitted by Arraya on March 27, 2010 - 5:04pm

http://blogs.reuters.com/rolfe-winkler/2...

How widespread are strategic defaults? Laurie Goodman and her team at Amherst Mortgage Insight yesterday released a report that shows they are indeed on the rise and for reasons we might suspect: negative equity and a more borrower-friendly environment.

The second reason should be kept in mind as we consider President Obama’s soon-to-be-announced plan to encourage principal reduction. If the plan is structured so that it gives incentives to default in order to secure principal forgiveness, well, expect defaults to spike.

Strategic default isn’t necessarily synonymous with mailing your keys to the bank and walking away. It may simply mean a borrower choosing to stop payments to the bank when economic incentives would have him do so. Amherst has come up with a novel metric to measure strategic default — the “default transition rate.” DTR looks at the percentage of borrowers who’ve never been more than one payment behind on their mortgage suddenly missing two payments in a row.

Lo and behold, negative equity leads more folks to strategically default, regardless of their credit score and whether they took out a liar loan:

Submitted by briansd1 on April 23, 2010 - 9:07am.

Arraya wrote:
Put another way, Bills living in the home for free is not driving bailouts. So why should anybody care if he does it, unless you are jealous.

Interesting take on this, Arraya, I agree there that is no telling how fast foreclosures would have occurred had the financial system collapsed and chaos ensued.

The FDIC and government would have paid back the insured depositors, but beyond that? Who knows? It might have been a free-for-all and Bill might have gotten his house free, in adverse possession, after years had passed.

I personally don't mind that some real people are benefiting from living for free. Collateral damage or benefit, however you want to look at it.

*

jpinpb, had the financial system not been bailed out it, i believe that it would have collapsed. Banks and employees would not have been around to foreclose quickly.

Now, after the bailout, the government encouraging the banks to be lenient is another thing.

Submitted by SD Realtor on April 23, 2010 - 9:08am.

Arraya there is no difference between someone who knowingly gets a loan to buy a home and then never makes a single payment and squats for as long as they want until they are evicted, and people like Bill, and also people who behave in the manner you are proposing.

It is one thing to come on hard times and default. It is another thing to take advantage of the system that is corrupt, broken, and subsidized by taxpayers. Your posts have NOT ONE SINGLE DROP of personal responsibility from the buyer but are filled with blame for the banks, blame for govt, blame for everything. Yes WE ALL sit here and agree that it is everyone elses fault for not foreclosing quickly. We all know that. Yet not everyone here shares your "we should all not pay our mortgages and live for free cuz the system is all f'd up". Try to come with a new take, we all know the system is f'd up, we all know there is greed and corruption everywhere yet it appears to me that most of the homeowners on the post here choose to make payments.

Like I said, if I were in the unfortunate position to be a deadbeat, I would show remorse, humility, and shame. I would not display bravado, nor would I blame the banks, the govt, the mortgage industry, the real estate industry and everyone else. I would blame myself for being a stump and buying into the hype. I would not brag about how much money I make on the stock market, or travelling around the world, or how much money I am saving by living for free.

Submitted by Arraya on April 23, 2010 - 9:11am.

jpinpb wrote:
Jealous? No. Resentful that my tax dollars go towards supporting the greed and stupidity of others, bankers or whoever contributed to this mess, yes.

I think if the banks were not being subsidized, they would want to act quickly to remove any non performing loans and start to generate income. I think in a free market, most businesses would want to act immediately to get revenues. I know that in today's times that just sounds like crazy talk.

Clearly from all the multiple offers I keep hearing about, there are people wanting to buy these homes from the banks. If we are hearing about it, I'm sure the banks are also. They know there are people out there ready and waiting to buy their nonperforming asset. Why are they not selling? Well, why should they? They are being compensated to do nothing. The joke's on us.

Ok, so why should you be resentful at Bill's action of living for free if it is not driving bailouts. I suppose you could be resentful that he decided not to pay his mortgage because in a tiny way it drove bailouts but also within the guidelines of our laws. But not his living for free.

The bailouts were because of a huge systemic structural failure. Not really because of individual homeowners actions. It's like being resentful of the bolts in a bridge that collapsed, were some of the bolts were tin instead of steel. When a few the structural engineers designed the QA for the bolts. Once the weak bolts go it adds stress to the stronger bolts and they break as well and the whole bridge collapses. From what we know Bill was a strong bolt that decided to bolt, when he saw the bridge going down.

Still, we have the same engineers doing the re-design on the bridge and we are continuing to look at all the bolts that are popping out.

Submitted by jpinpb on April 23, 2010 - 9:16am.

SDR - Thank you. Everyone living for free, please assume a little responsibility in your part.

Submitted by jpinpb on April 23, 2010 - 9:22am.

Arraya wrote:
Ok, so why should you be resentful at Bill's action of living for free if it is not driving bailouts.

Resentful of the situation, not him specifically, though, again, indirectly he was/is part of the problem.

He proudly claims he's not getting a bailout. I'm pointing out that indirectly he IS.

He also seems to absolve himself of any responsibility and in my eyes, albeit a cog in the wheel, he shares in being part of the problem. Rather than boasting about how he's contributing to this fiasco, I'd probably exercise a little less arrogance.

Submitted by NotCranky on April 23, 2010 - 9:27am.

Just another reason not to worry about what other people have or don't have. We are supposed to assume the haves( young guy with a couple hundred thou saved up) are somehow improved members of the species(I know they think they are), yet time and time again we see how many of them work the system, whore themselves, or take blood money to get there. What Bill is doing is so average. His vehicle is a little different is all. Maybe it's all he's got.

Submitted by jpinpb on April 23, 2010 - 9:36am.

Russell wrote:
Just another reason not to worry about what other people have or don't have.

It's not that I'm so concerned about what others have or don't have. But when it starts to impact me, then that bothers me.

Yesterday on KPBS they were talking about Obama being down at Wall St. and pushing this new regulation. They interviewed some Wall St. guy there and he said something to the effect that they don't need a parent telling them what to do.

Okay. If you don't need a parent telling you what to do, then take your lumps when you screw up. Don't come running to mom and dad for help when you're in trouble.

See, doesn't matter to me what people do, as long as the deal w/their own problems and I don't have to help them. But the problem is now so big that we all have to help them.

How can I provide an analogy? If someone is a drug addict and asks for money for treatment and instead buys more drugs, well then I have a problem w/it. Then don't ask me for money.

Submitted by SD Realtor on April 23, 2010 - 9:38am.

Arraya I don't think there will EVER be a perfect system, I don't even think there will ever be a good system! Jeez when we were teenagers we would make some scratch by doing yardwork and weeding. We would go to the store by tons of weedkiller, use it, fill the containers back up with water and return them. So because the hardware stores had a f'd up system, that justified our actions? We should get away with it because we could get away with it? The hardware stores were making tons of money anyways by taking advantage of dopey consumers and selling them all crap they didn't need so that makes it okay?

Fortunately we grew up and looking back we realized we were aholes and acting purely in our own self interest and if everyone in society did that things would really suck.

Submitted by briansd1 on April 23, 2010 - 9:44am.

Russell wrote:
Just another reason not to worry about what other people have or don't have.

I agree, but as scaredycat posted, the truth is that we all judge ourselves relative to others. As social animals, we cannot live disconnected from the people around us.

In some respect, Bill is doing everyone a favor. He didn't do anything illegal; and he didn't even violate the mortgage contract. Bill exposed a flaw in the system and we would be wise to remedy that flaw.

I actually believe that a Realtor or a businessman who takes his wife to dinner and writes the expense off as a meeting with a client is committing a much worse sin of greed. It's illegal; and it's amoral to let greed drive you for such a small amount.

jpinpb, I understand your feelings. But don't like your desire to buy a house and the lack of inventory frustrate you.

Sit back and relax; and it'll all work out in the end. Prices will return to equilibrium sooner or later.

I've gotten to a point that when I order something online, I don't bother to track the package anymore. I get it when I get it. My brother, on the other hand, wants it right away.

Submitted by Aecetia on April 23, 2010 - 9:48am.

You never keep ill gotten gains.

Submitted by jpinpb on April 23, 2010 - 9:49am.

Brian - this has nothing to do w/my desire to buy a house. This has everything to do w/my tax dollars going to people robbing me, basically. Oh, and no need to go into how taxes are robbery and all that. But this bailout and the actions by banks and homeowners and pretty much starting from the bubble to now, well, it's a whole new level.

Submitted by Arraya on April 23, 2010 - 9:51am.

SD Realtor wrote:
Arraya there is no difference between someone who knowingly gets a loan to buy a home and then never makes a single payment and squats for as long as they want until they are evicted, and people like Bill, and also people who behave in the manner you are proposing.

Says who

SD Realtor wrote:

It is one thing to come on hard times and default. It is another thing to take advantage of the system that is corrupt, broken, and subsidized by taxpayers. Your posts have NOT ONE SINGLE DROP of personal responsibility

Sure, they do. I support people being personally responsible, like bill is doing and I could give a fuck about him living for free. It does not affect me one bit. he is acting within legal guidelines and doing what's best for himself. Why do you think he should not act in his own personal best interest? Why do you support him being irresponsible to himself? Why are you showing disdain for personal responsibility?

SD Realtor wrote:

Like I said, if I were in the unfortunate position to be a deadbeat, I would show remorse, humility, and shame. I would not display bravado, nor would I blame the banks, the govt, the mortgage industry, the real estate industry and everyone else. I would blame myself for being a stump and buying into the hype. I would not brag about how much money I make on the stock market, or travelling around the world, or how much money I am saving by living for free.

So you can understand the action but are unsatisfied with his own personal narrative. Or are you angry that he wised up?

I don't blame you for all the houses you sold during the bubble years which contributed to the bubble. you were just a product of your environment working in your own self interest just as Bill is a product of his doing the same. Though I do accept the possibility that people in RE have more "blood" on their hands than bill does.

The problem is we have a society where individual interests are not inline and often at odds with others individual interests and it will be the death of this society.

We are a fundamentally bad design.

Submitted by briansd1 on April 23, 2010 - 10:02am.

SD Realtor wrote:
Jeez when we were teenagers we would make some scratch by doing yardwork and weeding. We would go to the store by tons of weedkiller, use it, fill the containers back up with water and return them. So because the hardware stores had a f'd up system, that justified our actions? We should get away with it because we could get away with it? The hardware stores were making tons of money anyways by taking advantage of dopey consumers and selling them all crap they didn't need so that makes it okay?

Fortunately we grew up and looking back we realized we were aholes and acting purely in our own self interest and if everyone in society did that things would really suck.

That's very different.

What you did was stealing weed-killer from the store.

Bill did not do anything illegal. And he's living up to his end of the contract. The bank is not exercising its remedy.

Arraya wrote:

The problem is we have a society where individual interests are not inline and often at odds with others individual interests and it will be the death of this society.

We are a fundamentally bad design.

Yes, for sure.

But it doesn't mean that we can't improve the design. ;)

What Bill did is no different from someone sheltering his money because a loophole in the tax code, just because he can -- like a builder shifting profits to capital gains rather than ordinary income.

Submitted by briansd1 on April 23, 2010 - 10:11am.

Aecetia wrote:
You never keep ill gotten gains.

Did you ever visit the Biltmore Mansion or the mansions in Newport, RI?

Submitted by NotCranky on April 23, 2010 - 10:50am.

How can anyone badmouth Realtors? They are dieing to reach out and help the suffering....short sale experts care most is seems.

http://activerain.com/blogsview/1516674/...

Submitted by SD Realtor on April 23, 2010 - 11:19am.

Arraya tell me the difference between one who "realizes" the mistake they made and one who knowlingly buys a home and never pays?

What is the real difference?

The result is the same for sure isn't it?

************

What is this "realization" that you are talking about. Again, your rationale for not paying for a home is what? I still am unclear on it even though we have gone in circles before, that you shouldn't pay on your loan because the asset has depreciated? Was that the basis?

Can you show me a case for perpetual appreciation of anything on the planet?

************

Acting within guidelines to me is not enough. It is perfectly legal to drink alcohol and even to act like an asshole when you are drunk. It is not illegal to vomit in the bar or to hit on every girl in the bar either. Well why did you do it? Cuz you were drunk right? You were acting within the guidelines when you were drinking. Nothing illegal there.

************

I also do not believe this is victimless. I wish people would stop saying TARP money and start saying taxpayer money. It doesn't matter to me where the taxpayer money goes, if it goes to the banks, if it goes to the freeloader, it is taxpayer money. It could be going to healthcare, it could be going somewhere else. It is a waste.

We do not have a society where everyone could live for free. It breaks down.

************

RE people have plenty of blood on their hands and I sold lots of RE in the bubble. Fortunately I can say that everyone I work with heard the same words from me, I would not buy right now and I RENT BECAUSE I THINK THE MARKET IS OVERPRICED. In fact even today, people who have used me hear me say the same thing. I give them my honest opinion and they thank me for that. Some keep moving forward and some do not.

************

Brian my example was one of theft but that was not the point. The point was that there is no such thing as a perfect system or a good system that cannot be taken advantage of. Not all laws make sense nor do guidelines.

************

I think that one could easily argue that being a deadbeat and staying in the property is doing EXACTLY what the banks and govt want you to do. If you hand over the keys and leave the bank is responsible for the home, for maintaining it and there are local ordinances that will fine them in some areas. Furthermore the property does indeed get treated differently once the property does revert to the banks. Kicking the can down the road is exactly what everyone wants. The govt wants it and the banks want it. So this don't pay, I won't force you to leave game and Uncle Sam will keep funding me will continue.

***************

Doesn't look to me like anyone is suffering under this scenario at all. Wall St looks okay to me. All the lenders and GSEs seem to be okay as well. So yes Arraya, your strategy is probably being counted on by the govt and Wall St to continue. It is fundamentally bad design and yes just think if everyone that was a deadbeat upped and left. Just mailed in their keys and left.

Now that would be quite a sight wouldn't it? We would suddenly have a ton of empty houses, inventory up the wazoo, and I believe you would see a sharp CORRECTION in prices.

Submitted by jpinpb on April 23, 2010 - 11:36am.

SD Realtor wrote:
I also do not believe this is victimless. I wish people would stop saying TARP money and start saying taxpayer money. It doesn't matter to me where the taxpayer money goes, if it goes to the banks, if it goes to the freeloader, it is taxpayer money. It could be going to healthcare, it could be going somewhere else. It is a waste.

We do not have a society where everyone could live for free. It breaks down.

THANK YOU!!! You would think this would not even have to be said.

Suppose Bill and everyone not paying their mortgage while they live in their homes for free had roles reversed and homeowners were required to indirectly pay for renters who did not pay their rent. I'll go out on a limb and say the homeowners might have a little resentment.

SD Realtor wrote:

If you hand over the keys and leave the bank is responsible for the home, for maintaining it and there are local ordinances that will fine them in some areas.

Exactly right. Good example is when the developer walked on those houses in the high desert and the city started fining the banks for violations. Banks then become responsible. (the horror!)

SD Realtor wrote:

Furthermore the property does indeed get treated differently once the property does revert to the banks.

I agree there's more pressure for the bank to act.

Submitted by briansd1 on April 23, 2010 - 12:57pm.

sd realtor, I understand your point about the consequences of unsavory behavior.

As a libertarian do you really expect individuals to behave in the communal interest, to the detriment of their own personal interests?

The invisible hand doesn't work when individual interests conflict with the benefit of the whole.

That's why we need a guiding hand. Few buyers would walk away if the downpayment were substantial. Banks would not lend stupidly if interest rates were higher and if instruments to spread risks around were regulated. I believe that those are the root cause of the problem.

On the subject of foreclosures, vacating a house doesn't mean that the bank takes title and is responsible to maintain it.

Want banks to foreclosure quickly? Force them to aggressively write down the loan proportional to the collateral.

Economists would actually tell you that vacant houses are wasted economic assets. It's better to have them occupied than vacant.

Submitted by Arraya on April 23, 2010 - 1:08pm.

SD Realtor wrote:
Arraya tell me the difference between one who "realizes" the mistake they made and one who knowlingly buys a home and never pays?

What is the real difference?

The result is the same for sure isn't it?

Intent, which is incredibly hard to prove in the court room. Like when Bernake testified in congress that there was no bubble in Dec 2005. If he knowingly mislead it is up to 30 years in jail whereas being a dumbass you get off scott free.

I guess you could make similar analogies for RE agents during the bubble intent verse being stupid. I'm sure there were plenty that knowingly and unknowingly put people in bad positions.

Submitted by Vishon on April 23, 2010 - 1:19pm.

To me this is a purely legal issue. The money was borrowed in a business deal with terms well defined. Defaulting is an option with consequences. If the owner is willing to accept the consequences, it is their choice to default.

It is not like the money was borrowed from their family or friends with no contract signed, and the owner is not paying it back.

Submitted by sdrealtor on April 23, 2010 - 5:34pm.

I have heard of many people getting pursued for deficiencies. The one action rule takes care of the 1st mortgage that forecloses. A sold out 2nd (that gets nothing) that is not a purchase money loan has full reourse. They can hid in the tall grass for years and when the economy recovers there will be a knock on the door.

Submitted by CA renter on April 23, 2010 - 11:09pm.

Wow. I cannot believe all the support for deadbeats on this thread.

Don't get me wrong, I can see why they do it, but to think that so many apparently think it is ethical...I am very surprised.

It is not a "victimless" action. Those who were responsible and stayed out of debt they couldn't repay are being wronged.

New (potentially more responsible) buyers are being priced out of the market because they don't want to overpay or stretch their finances too much (which is exactly why all these FBs are in the position they're in!).

Savers are getting 0-2% on their savings while asset price inflation screams through the roof -- their purchasing power is deteriorating rapidly.

Additionally, we will be paying for these bailouts in the form of higher taxes, fewer/lower-quality services, and lost purchasing power for many decades to come, IMHO.

Finally, we will have a problem with moral hazard from here on out. Everyone (individuals and corporate entities) will now feel entitled to have the govt (OTHER TAXPAYERS) cover their losses whenever they make a financial mistakes.

These deadbeats (borrowers AND lenders who refused to do due dilligence) are parasites, not victims.

Submitted by BillS78 on April 24, 2010 - 4:44am.

jpinpb wrote:
Bill - indirectly you are being bailed out. Because of the fact the banks got money from the government (taxpayers) they are not foreclosing on you as soon as they normally would.

I understand your frustration with the system, from Brian's post it sounds like you want to buy, but I still don't agree that I've been bailed out. The $900 to $1200 a month that I've saved from not paying rent is dwarfed by the manipulated home price levels from the bank bailout.

I would be much better off if the bank bailouts had never happened. If there was no government intervention, that I'm paying for too mind you, housing prices would be far lower than they are now and I would be right back in the market by the end of this year at far lower prices. It sucks that that didn't happen and people like you got screwed, but you need to understand that my ~$25k in free rent does not offset the rigged price levels out there that bankers and realtors are profiting off of.

There shouldn't have been a bank bailout and the tax code should be changed so there isn't profiteering off of speculation. I'd be far better off if 20% down was mandatory and all loans were recourse, but that's not the way the system is gamed. The system is set up for banks and realtors to profit and not for people like you who want to buy a home.

It's too late for should'ves now and the last person I'm going to listen to is a lying hypocrite that wants to declare what's right or wrong for everyone while profiting off a corrupt system.

I missed out on earning multiples of the $25k that I "saved on my free rent" because of the bank bailouts. My shorts would have paid off so much more, I haven't been bailed out I've lost money on the bank bailout.

People who want to declare whats morally right are the disease not the cure.

Submitted by BillS78 on April 24, 2010 - 5:23am.

CA renter wrote:
New (potentially more responsible) buyers are being priced out of the market because they don't want to overpay or stretch their finances too much (which is exactly why all these FBs are in the position they're in!).
Hey I'm being priced out of the market just like any other potential able buyer because I don't want to overpay. I've lost more money than I gained from the bank bailout, by your definition I should be one of the whining "victims" on this thread instead of the person who from my first post stated that the decision to buy was 100% my fault.

Submitted by jpinpb on April 24, 2010 - 8:45am.

BillS78 wrote:
I understand your frustration with the system, from Brian's post it sounds like you want to buy, but I still don't agree that I've been bailed out.

We can agree to disagree.

BillS78 wrote:
The $900 to $1200 a month that I've saved from not paying rent is dwarfed by the manipulated home price levels from the bank bailout.

$900 to $1200 a month more than I'm getting or any renter, for that matter.

BillS78 wrote:
I would be much better off if the bank bailouts had never happened.

We all would be.

BillS78 wrote:

If there was no government intervention, that I'm paying for too mind you

Still getting $900-1200 a month back on it. More than any renter.

BillS78 wrote:
housing prices would be far lower than they are now

Agree

BillS78 wrote:
It sucks that that didn't happen and people like you got screwed, but you need to understand that my ~$25k in free rent does not offset the rigged price levels out there that bankers and realtors are profiting off of.

bill - you and anyone else not paying their mortgage have one up on the renters who have gotten screwed since day one of the bubble.

BillS78 wrote:
There shouldn't have been a bank bailout

Agreed.

BillS78 wrote:

and the tax code should be changed so there isn't profiteering off of speculation.

I don't see that ever happening.

BillS78 wrote:
I'd be far better off if 20% down was mandatory and all loans were recourse, but that's not the way the system is gamed. The system is set up for banks and realtors to profit and not for people like you who want to buy a home.

Kudows to you for working the system.

BillS78 wrote:

I missed out on earning multiples of the $25k that I "saved on my free rent" because of the bank bailouts. My shorts would have paid off so much more, I haven't been bailed out I've lost money on the bank bailout.

Again, you don't want to think of it as a bailout, but trust me, for anyone spending money every month on rent AND having to pay the taxes for this bailout, at least you've got a little something every month to do w/what you want to ease the pain. Still better than a renter. Who wouldn't want to live in their place for free?

BillS78 wrote:
Hey I'm being priced out of the market just like any other potential able buyer because I don't want to overpay.

Again, every month you live for free deprives you of the right to complain. Go back to renting, then chime in about how wrong it is. When you start shelling money every month while others live for free, indirectly thanks to our tax dollars, then by all means, join us in lamenting about it.

And again, I understand you are abiding by the contract and you're not doing anything illegal. Nevertheless, the situation is such that anyone doing the morally right thing is getting royally screwed.

Submitted by Arraya on April 24, 2010 - 8:47am.

Well, here's the thing Bill. People feel like you should be punished since the market did not do a sufficient job for your poor decision to purchase.

See, you self corrected without market punishment and benefited. And since the "market" did not administer proper punishment, you will continue to make poor market decisions. Or at least that is how it is supposed to work.

All is not right in the world

Submitted by flu on April 24, 2010 - 9:11am.

...and yet some people still wonder why companies need to pull folk's credit files as part of consideration for hiring for some positions....

Would you feel comp some of these clowns at a datacenters with access to your PII or worse to things needing security clearance???

http://articles.moneycentral.msn.com/Ban...

When I use to run a part of a systems group that handles b-2-b transactions, folks always wondered why as part of background check we pulled criminal records and credit reports. It wasn't the only deciding factor, but was one extra data point to consider in hiring, granting access to parts of the system,etc.

Submitted by jpinpb on April 24, 2010 - 9:25am.

Arraya - please consider that anyone who bought a home during the bubble, for whatever reason, fear of being priced out, pressures, greed, stupidity, whatever, contributed to the bubble. Cogs in the wheel. Some people abused it and bought multiple houses.

This is NOT a question of FBs having to be punished. It is principle. People need to be responsible for their own decisions. Period. Goes for companies and individuals. Now I did not go around telling people not to buy. People can and will do what they want. And they did. Buying and spending like no tomorrow. Taking trips. Buying toys. Bragging and showing off. All great.

But now the piper's coming home. Rather than owning their mistakes, they are getting rewarded. See the problem here? No. Because maybe you are in Bill's boat. If people want to make bad decisions (buying a house during a bubble) then that's their perogative. But do not come back later and expect to get help, too.

I resent having to help people/companies that made bad decisions. The only punishment going on is to ME. I am being punished for making right decisions. And to add insult to injury, I am having to pay companies and homeowners for their bad decisions.

Give it a rest, Bill and Arraya. You are working the system, but you do not get to complain about it while benefitting from it.

Submitted by patientrenter on April 24, 2010 - 9:18am.

jpinpb wrote:
.....Nevertheless, the situation is such that anyone doing the morally right thing is getting royally screwed.

Agree. Nice counterpoints. For some people, being moral is limited to obeying the law. Society couldn't function if everyone went to the edge of the law, regardless of how many lawyers (or free-loaders) may idealize that kind of society.

Submitted by briansd1 on April 24, 2010 - 9:19am.

flu wrote:
...and yet some people still wonder why companies need to pull folk's credit files as part of consideration for hiring for some positions....

So there you go. There are consequences to people's actions.

It's up to each person to make the cost/benefit calculations.

Bill decided that it's financially better for him to let the house go to foreclosure. It's a business decision the same as a company filing for bankruptcy. Would you given credit to a bankrupt company? Many vendors do. They decide it's better than losing a customer.

If you want to be angry, don't be angry at those who lived by the rules.

Be angry at those who didn't enforce the rules because they believed the market could self-regulate. There is only self-interest, self-regulation never works.

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