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Gold/Mining/Energy : Big Dog's Boom Boom Room
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To: Think4Yourself who wrote (41118)3/31/2005 1:43:30 AM
From: cherrypitter  Read Replies (1) of 206212
 
JQP: My post was in answer to your comment:

>>>If the housing market collapses there will be lots of gnashing of teeth when people realize their "out" is gone and they actually have to live up to their contractual obligations.<<<

People in the circumstance you describe live up to their "contractual obligations" by returning the collateral for the loan ie: the house that has collapsed in value.

No harm no foul. Credit rating likely would not be impaired as their is no default. In WA state and others, a home buyer can not be sued for deficiency judgement when he returns the keys for a $100,000 house (due to market collapse) for which he owes $120,000. The mortgagee has agreed to accept the home as total collateral as a matter of law.

Sure there is greed involved when a developer agrees to accept a miniscule d.p. to sell an already overvalued home. An the mortgagee stands to loose his home when the market crumbles and he finds he has huge negative equity. But he gets out from under an onerous debt load and can take advantage of the impacted housing market to buy something at a lower price. Maybe even buy back his old house at an attractive price!

Its the American way. :-)

Rich
p.s. Good to have you back posting. Almost like the old days.
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