Fannie Mae bans homeowners who walk away from mortgages from getting new loans for 7 years I'd make it 70
Tougher? You would be as strict with a corporation who went BK and walked away from their responsibilities? LMAO... Corporations walk away and leave stockholders with nothing...and the right wingers get in a snit because a homeowner walked away from a mortgage? Look, let's be adults... The company that financed the overpriced home took a risk. The buyer took a risk. The people who ended up with the bad loans took a risk, yada, yada, yada... This is the American way. Have a ponzi scheme by a corporation, and they just BK and start over...but punish the little guy for being just as greedy as the big guys? Damn silly... If anything, we need to make it easier for the little guy to stick it to the banks and the bag men on Wall Street...that way they might actually act more carefully, rather than fueling each and every bubble we have...and eventually sticking it to the little guy... http://www.reuters.com/article/idUSTRE65L36T20100622
The problem is non-recourse mortgage loans. Why any lender would make a non-recourse loan is beyond me. Heads I win, tails you( the lender) loses. I don't blame people for walking away. The lender willing took on the risk. Let them deal with it. Think of it as a margin call. Every trader knows you don't meet a margin call. You liquidate.
True. In the case of non-recourse mortgages, the lenders are only that much more to blame for their own losses resulting from inadequate due diligence. They knew the rules of the game going forward and are, after all, the "professionals." That they thought they were gaming the system and were left holding the bag makes it art. Just dessert.
You all act as if this market placed was not rigged. Look until the Wall Street con men realized they were back stopped by the government... people in CA for had to pay 4- 6 points higher in their interest rates and 2-4% to hard money lenders for the last 20% of the loan. (because we had some non recourse loans.) Then Wall Street set up the big fraud in which they underpriced the hard money guys. They could do this because they were not risking their own money. They were selling China's money but China new the Fed would back stop them. Now after the systems crumbled we have the FHA spending over a trillion dollars - giving out below market mortgages at 96.5 to 100%... to save the banks and stablize the low end of the market. --- The market worked fine until Clinton eliminated glass steagall, congress choose not to regulate CDOS, wall street went from partnerships to corporations --- and Barney Frank Chris Dodd on most of Congress sold themselves to banks. Get the government out back stops out of banking. You will see market, risk, loans and interest rates balance out again. We will instantly see higher interest rates and lower house prices.