Banks may also have a liability to mortgage holders other than themselves if it can be shown that there was fraud in the underwriting process, such as excessively high appraisals of the collateral, the creditworthiness of borrowers, etc.
Peter Hollings -----Original Message----- From: [EMAIL PROTECTED] [mailto:[EMAIL PROTECTED] On Behalf Of Laurent GUERBY Sent: Monday, March 24, 2008 9:53 AM To: Progressive Economics Subject: Re: [Pen-l] Is this true On Mon, 2008-03-24 at 09:14 -0400, Shane Mage wrote: > Of that $11 trillion most is not "subprime." So the question is how > much equity underlies that $11 trillion, certainly not as little as > 100%! And so the potential writedown has to be much less than that > $1.375 trillion. The question for this crisis is "subprime or not" but "equity or not". Even prime borrowers don't like to pay debt which is more than the value of their house and no hope having the value go back fast enough. Some of them will keep paying, some will likely try hard not to pay which means huge legal fees for bank and big stress on the justice system given the number of households with negative equity. I read 8 millions households somewhere and the number is going up when house prices go down. Laurent http://guerby.org/blog/ _______________________________________________ pen-l mailing list [email protected] https://lists.csuchico.edu/mailman/listinfo/pen-l _______________________________________________ pen-l mailing list [email protected] https://lists.csuchico.edu/mailman/listinfo/pen-l
