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Strategies & Market Trends : 2026 TeoTwawKi ... 2032 Darkest Interregnum

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To: Snowshoe who wrote (91273)	6/9/2012 4:45:40 AM
From: Maurice Winn	1 Recommendation Read Replies (1) of 218012

The best solution for mortgagees and underwater mortgagors is to come to some arrangement whereby the "owner" can stay in "their" house, while the mortgagee gets as much money as the mortgagor is willing to pay for the privilege of staying where they are, thereby retaining convenience, pride of ownership, avoiding transaction costs and whatever else they value about the property. It isn't really in the mortgagee's interest to turf the existing owner out to be replaced by somebody who just wants a really cheap bargain. The two most logical parties to the property are the existing owner and the existing mortgagee. A replacement mortgagee would likely assign little value to the loyalty of the existing owner and would bid a low price for taking over the mortgage, such that they could simply turf the owner out and flog the property off to whoever shows up at an auction. Because mortgagees don't get a vote and there are many underwater mortgagors, it's likely that politicians will decide to rob mortgagees and hand the proceeds to the house owners. That will mean future mortgagees will NOT lend money to prospective house buyers unless they have a large deposit to ensure the mortgagee doesn't end up ruined by the politicians stealing their property. Lending 105% on a property to people with no visible means of repayment was hardly sensible, so such creditors should reasonably expect to lose their money and that's what has happened and will happen. Creditors have to use reasonable judgment to avoid such losses. They did not use reasonable judgment. Alan Greenspan KBE was shocked that such mortgagees were so careless with shareholder funds. Shareholders should maintain a closer watch on the managers they employ and not pay them huge bonuses for running the company into the ground. Mqurice

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