Ed wrote:
> Ever so many houses financed by subprime mortgages have now gone
> into foreclosure and can only be resold at a loss if they can be
> resold at all. We've all seen pictures of neighborhoods in
> Cleveland or Chicago with their streets of boarded up houses.
And rapidly stripped of copper wiring and plumbing, sometimes of
aluminum siding. So the entity holding the bag has to pay for
demolition and possible environmental remediation. And then try to
sell a vacant lot in a bombed-out neighborhood during a recession. So
why not just forgive the loan and transfer title to the borrower?
After a certain watershed point, it's cheaper than holding the
nearly worthless property and paying or litigating the liabilities.
I'm guessing that the principle underlying the preference to hold the
liabilities and dump the borrower is that It's Just Not Done because
to do so would open a crack, however tiny, if the stone wall of
property rights through which a trickle of the common good might
enter. Someone with a better background in history will perhaps say if
this isn't reminiscent of the Shays rebellion and the hijacking of the
American revolution by the federalists.
> But there are deeper foreground factors, including the belief that
> Americans, whether they have money or not, whether they have saved
> anything or not, are entitled to own homes and other expensive
> life-style assets almost as a birthright. And how would they do
> this? Why, by accessing cheap money.
Well, kinda cheap maybe, by the standard of debt for business that's
calculated to pay for itself and return a profit.
It has always seemed insane to me that it is conventional, when buying
a dwelling, to pay the vendor the agreed price, then pay the bank
roughly the same amount of money, pay a significant fraction of the
same amount to an insurer and commit to paying for anything the
insurer may order you to have. Building codes, safety and fire codes,
unsightly premises regulations etc. do not ensure that people won't
live in dangerous, ugly, crumbling slums and hovels. Instead they
conspire to make it extremely difficult to provide one's own shelter
within one's means and without carrying the financial weasels on one's
back.
FWIW,
- Mike
--
Michael Spencer Nova Scotia, Canada .~.
/V\
[EMAIL PROTECTED] /( )\
http://home.tallships.ca/mspencer/ ^^-^^
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