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Strategies & Market Trends : Mish's Global Economic Trend Analysis
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To: SteveinTX who wrote (107677)2/1/2010 6:01:57 PM
From: Perspective  Read Replies (2) of 116555
 
< It seems to imply that underwater homeowners shouldn't be held to their contractual obligations because the the banks they contracted with are all scumbags themselves.>

Actually I thought it was saying that the contract specifies what is required, and what the consequences are for failure to comply. A rational participant should evaluate if the consequences of failure to comply are more or less severe than the consequences of compliance. While Paulson and his ilk regularly break contracts because it is economically favorable, they wag their fingers at individuals who would do the same. While I agree that most of these underwater homeowners should have never taken out the loans, now that they have them the best course of action for them is generally to walk away. Your credit rating simply isn't worth that much (as Donald Trump could tell you). You and I would not do business with them again, but some fool banker playing the game with the public backstop will gladly lend to them.

BC
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